Preamble

The House met at Ten o'clock

PRAYERS

[Madam Speaker in the Chair]

Housing Market

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lightbown.]

Mr. Nicholas Winterton: I am delighted to have the opportunity to debate and discuss the housing market. Macclesfield borough is a prosperous and successful borough in the north-west of England and, following the local elections a fortnight ago, is the only borough that has overall Conservative control north of a line from the Wash to the Severn. It is an area where people want to live and where people want to move to live, where businesses want to expand and where new businesses want to locate. So, quite clearly, it is a successful area.
But I know that hon. Members on both sides of the House will agree when I say that housing is fundamental to all 651 constituencies in the United Kingdom, and problems that face home owners affect all 651 constituencies.
I want to start the debate by quoting Lady Thatcher, now in another place, from her book "The Downing Street Years", page 698. She writes:
I was … acutely conscious of what interest rate changes meant for those with mortgages … borrowers … lives … can be shattered overnight by higher interest rates. My economic policy was … intended to be a social policy. It was a way to a property-owning democracy. And so the needs of home owners must never be forgotten.
It is because I believe that my Government have forgotten about the importance of home owners that I have asked for this debate today.
Hon. Members on both sides of the House will be aware that my interest in the construction industry is of many years' standing. So concerned have I been by the lack of attention given to its problems and its potential that two years ago I formed, with all-party support, the manufacturing and construction industries alliance in Parliament.
This debate, which I have managed to obtain this morning, has also been warmly welcomed by the House-Builders Federation, the Council of Mortgage Lenders and the Building Societies Association, which all accept the fact that the health of the housing market is now so parlous that to fail to call out for understanding and support could be fatal.
The manufacturing and construction industries alliance, which I have said has all-party support and backing from every sector of industry, including trade unions, exists to move the needs of manufacturing and construction further up the public, political and parliamentary agenda.
Never has that been more necessary than it is today. The housing market has been in recession in the south of England since August 1988 and in the north since around mid-1990. As Joe Dwyer, the group chief executive of George Wimpey plc, told the alliance at its most recent presentation here in the Palace of Westminster immediately following the latest Budget, the housing industry still shows no sign of sharing in the undoubted move out of recession that much of the rest of our economy is now experiencing. That was not my view; that was the view of somebody uniquely, over many years, involved in the housing and construction industry here in the United Kingdom.
While the United Kingdom was in the exchange rate mechanism, things were especially difficult, because the very high interest rates that then prevailed deepened the recession, and the housing market could never recover in those circumstances.
However, since our happy escape from the ERM on "White Wednesday", as it has come to be called, we have been able to enjoy greatly reduced interest rates. Although, sadly, the Governor of the Bank of England appears willing to put at risk the fragile recovery that we are experiencing, there has indeed been a steady improvement in our economy—at least the part of it that is involved in exports.
Ministers have consistently told us that there would also be steady improvements in the housing market. However, after a brief improvement in late 1993 and early 1994, the housing market has again faltered. This year, there are fears that it will do far worse than falter. All the evidence that I have been able to find suggests that the housing market is far weaker than expected and that Ministers cannot—dare not—complacently await its improvement.
Estate agents report that, in the period to the end of April, their sales are almost 20 per cent. less than in the same period last year. House builders, who comprise about 11 per cent. of the market, are maintaining their share of the market, but continue to sell at about 4 per cent. below 1994 levels. Therefore, not surprisingly, total building society new lending is down. For example, the Halifax building society reports that prices are beginning to fall yet again. That is because fewer sales are bound to weaken prices.

Mr. Oliver Heald: Obviously, the evidence is mixed, but in East Anglia the first quarter of the year shows an increase in prices of 1.6 per cent. overall, and there has been an increase of 4.3 per cent. in prices of new properties. In fact, there has been an increase in new property prices in East Anglia in every quarter since the end of 1993. Does my hon. Friend believe that the evidence is slightly more mixed than he suggests?

Mr. Winterton: I am not suggesting for a moment that there are not pockets of bright light and of encouragement. I can only go on the information provided to me by house builders, by the House-Builders Federation, the Council of Mortgage Lenders and the Building Societies Association—people who are uniquely in a position to provide that information—who say that the market is


faltering and that overall, things are bleak for the housing sector and for all those supplying those parts of the economy, which are so important to this country.

Lady Olga Maitland: rose—

Mr. Winterton: I will not give way again at the moment. I want to develop my argument.
The National House-Building Council reports that new house registrations—that is, new building starts—are 17 per cent. down in the first quarter, and the Brick Development Association, which should know what is going on, advises me that brick deliveries in March were 8 per cent. down on those for March 1994. That is consistent with the major house builders, who say that they are laying off bricklayers and cutting back further on production in direct response to falling sales.
On Friday night, I spoke at a dinner in the Moat House hotel at Wilmslow. After my speech, I was asked a question by a young executive, a young man from Merseyside involved with training. He said that he was deeply worried about the failure to provide jobs for young people after they had received basic training from the various schemes offered by the training and enterprise council. He highlighted especially the problems of the construction industry, which in the past has been such a major employer of young people and semi-skilled people in the Merseyside region.
The weakness of the housing market is starting to knock on to employment and spending power in the domestic economy as a whole. Building workers and building materials, as we know—and as my hon. Friend the Member for Chorley (Mr. Dover) will be more than aware—are only the start. Falling housing transactions are widely reported by retailers as a key factor in the undermining of certain markets. White goods, furnishing, timber, carpets, curtains and do-it-yourself—all are affected.
No one can claim that the condition of the housing market does not fundamentally matter to the economy and to employment in the United Kingdom. It is of great significance to the recovery of the domestic economy and it is of massive significance to the fortunes, dare I say it, of my Government, the Conservative Government.
In my opinion, the Conservative party is, and always has been, the party of home ownership. We can be rightly proud of the fact that we have expanded home ownership since 1979 from about 54 per cent. to 67 per cent. of households. When we ignore the problems of the housing market, we ignore the problems of our strongest supporters and, dare I say it, their greatest asset.

Mr. Tony Banks: Does not the hon. Gentleman find it disturbing that so much of our country's economic prosperity has to be based on the housing market? I can well understand the way in which it affects the housing market, but the feelgood factor is absent precisely because of the facts that the hon. Gentleman is talking about. As the hon. Gentleman is a great champion of manufacturing industry, does he agree that it would be better to base our wealth and prosperity on that sector rather than on prices in the housing market?

Mr. Winterton: I cannot but agree with the opinion expressed by the hon. Gentleman. Indeed, I am not in

favour of people investing all their money, all their savings, in property. I was deeply unhappy about the property boom of the late 1980s, resulting from decisions of a Conservative Chancellor, who allowed property inflation to roar away. That factor contributed to many of the economic problems that we experienced shortly thereafter. I want people to be encouraged, by fiscal and other measures, to invest in manufacturing in this country. As the hon. Gentleman knows, I want a massive expansion of our manufacturing base, because only when we do so shall we have a stable, successful economy in the long term.
Every time there is hope of a housing recovery, the Governor of the Bank of England mistakes that for overheating in the economy and urges the Chancellor of the Exchequer to increase interest rates, thus undermining confidence among would-be purchasers even further. Every time he does that, he pushes more home owners and more of the Government's traditional supporters into negative equity.
More worrying still have been the policies pursued by some of my right hon. Friends and the effect that they have had on the whole housing market. The Chancellor of the Exchequer has reduced mortgage interest relief at source for two successive years. He has in that time increased interest rates three times, although I must and do sincerely congratulate him on resisting the siren calls from the Bank of England to do so yet again two weeks ago. I say to him, and make this comment very forcibly, long may he continue to resist, and long may the pound continue to confound those who criticise the Chancellor's decision.
Unfortunately, my right hon. and learned Friend the Chancellor of the Exchequer pretends that those changes in his policy, regarding MIRAS and interest rate increases, are not important to the housing market. He regularly tells house builders that the cost effects of those measures are so trivial that they are not responsible for the weakness of the housing market. In my opinion, that position is untenable, especially as the start of the current dip in the housing market coincided exactly with the first cut in MIRAS in April 1994 and with the beginning of the psychological war being waged by the Bank of England against low interest rates.

Mr. David Nicholson: rose—

Mr. Winterton: I shall give way in a moment, but I want to develop my argument further.
The effect of those policies has been a reduction in spending power—as was intended—and a blow to confidence in the housing market.
To add to that, the Secretary of State for Social Security has published proposals to limit mortgage interest support for sick and unemployed people. Every housing market commentator and expert whom I have found and read about has condemned those proposals as being bound to eliminate marginal home buyers from the market and to put some existing and future home owners at risk. They threaten further extension of home ownership to marginal groups, something that I know is dear to the heart of our Prime Minister.

Mr. Nicholson: I am listening to my hon. Friend's arguments with substantial agreement and considerable admiration, but, given the fact that, for the past two years, interest rates have been lower than for most of the past


15 years, would not a longer-term benefit of cuts in MIRAS be the avoidance of a return to the position described by the hon. Member for Newham, North-West (Mr. Banks), where people could expand their capital only by investing in housing and not, as my hon. Friend wants, by investing in manufacturing industry?

Mr. Winterton: There is some sense and rationale in my hon. Friend's view, but home ownership is fundamental and a way for people to invest in their future. As I said, I do not want second and third houses, which is what resulted from mistaken policies that were implemented some years ago.
We cannot continue to treat the housing market and home owners as we are now. We ignore their problems at our peril, both economically and—perhaps this has more effect on Treasury Ministers—politically. Economically, we must look to a significant strengthening of the domestic economy, and that must be soon. Exports may be benefiting from the devaluation of the pound, made possible by, for example, our exit from the exchange rate mechanism, but the domestic economy is fragile and in danger of faltering. Let us not forget that nearly four times more households are employed in the domestic sector, sadly, than in our export-led economy. I say to my colleagues in the Treasury team that it is the domestic economy and the businesses in it that will produce the employment and the profits that are needed to increase tax revenues and so reduce the public sector borrowing requirement and thus the budget deficit.

Mr. John Spellar: May I take the hon. Gentleman back to marginal purchasers in the housing market? Is not one of the fundamental problems in the housing market that a huge swathe of the employed population no longer feel secure in their employment? They feel threatened by the constant references to there being no secure jobs, as if that were a virtue. They are considerably concerned by the Government withdrawing cover in the event of their becoming unemployed. Other major purchases result in a long-term commitment on payments, for example, in the automobile sector, which as we know is also in recession in the domestic market—[Interruption.]—not production, if the hon. Member for Sutton and Cheam (Lady Olga Maitland) will listen to what I am saying. Sales of cars are in a serious position in the same way as sales of houses, because no one feels secure in making a long-term commitment.

Mr. Winterton: One or two of my colleagues may not like me for saying it, but that is an accurate assessment of the position. It is one of the reasons why we do not have a feelgood factor. On many things in the House, there can be consensus and common ground. I am sure that, in many areas relating to housing, there is common ground between hon. Members on both sides of House.
Any upturn in the domestic economy is being retarded by the housing market weakness. The inevitable consequence of that will be a shortfall in income and corporation tax revenue, making any strategy of tax cuts in the next Budget difficult, if not impossible. Thus, there is a clear link between the weakness of the housing market and the Government's ability to deliver their key policy objective before the next general election.
I say to my colleagues on the Treasury team that, politically, we cannot afford to alienate home owners or to treat their fears or aspirations with contempt or

indifference, yet sadly the Government are widely perceived to be doing just that. Voices have been raised by mortgage lenders and house builders complaining that the Government are turning their back on home owners and home ownership as a policy.
How can we have let ourselves get into a position in which articles such as this appear? One in the Daily Mail of 3 May had the headline:
What do the Tories have against the hard pressed homebuyer?
Another in The Times of 5 May stated:
From subsidy to subsidence: a Tory approach to housing—Janet Bush says the Government is merely aggravating a market already deep in trouble.
That is a sorry state of affairs. Something must be done. I fear, however, that the doleful noises from the Treasury and the Bank of England about the consequences of doing something have frightened the Government into silence. Threats of a return to inflation seem to paralyse us all like rabbits in a car's headlights, yet we all know what happens to the rabbit thus paralysed with fear: he gets squashed anyway. We cannot continue to be frightened of doing what is obvious and necessary by an irrational and obsessive fear of inflation.
Expert opinion is now clear. The housing market is so depressed that a significant increase in transactions is vital immediately to stop it deflating throughout the rest of the year. There is a risk of price falls, now being reported month on month throughout the year by the building societies. I ask my Conservative colleagues—and perhaps colleagues on both sides of the House: how do they think their constituents will react to further falls in house prices?
The Government simply cannot expect to survive such a scenario. That last happened in 1992 and was brought to an end by interest rate reductions after our exit from the ERM. No similar bolthole exists for us today. There is not only a risk of deflation, leading to more home owners in negative equity, but, conversely, there is no risk of a housing market recovery triggering the return of the inflation that Eddie George claims wakes him in the night. We cannot afford to allow our entire economic strategy to be run by a single-issue fanatic sitting in Threadneedle street.
As The Sunday Times said on 30 April:
The Prime Minister … appears unaware of the trap his government is falling into: 'The prize of keeping the economy growing steadily, with low inflation, is a prize we have not seen in the past,' he says … 'We are here,' he says, 'for the long run' … This week's local elections will confirm that it would take only the rash or brave to bet on Mr. Major's long-run hold on power. The more the chancellor, egged on by Eddie George … succeeds in slowing the economy, the larger the government's budget deficit and the more difficult for 'prudent' tax cuts to be announced before the election. Without them, the Tories' already slim chance of electoral salvation can be written off.
Again, that is a fairly accurate assessment of how many people feel.
On 30 March this year, I expressed my concern in the House to my right hon. and learned Friend the Chancellor about the crisis in the housing market. He denied that there was any crisis, but did concede, I am pleased to say, that there was a weakness. He went on to say that, regardless of that, any artificial stimulus would have even worse consequences, so he would do nothing but await a natural recovery. I wholly reject that view and would argue that it is the Government who, far from giving


artificial stimulus, are kicking the housing market by specific measures that are further weakening it, when it is already facing a serious crisis.
In short, confidence in the housing market continues to suffer as a direct result of a series of Treasury-inspired blows to its head. Measures are urgently needed to avoid the crisis worsening. They must not be half-hearted, such as another stamp duty moratorium. They must put more purchasing power and confidence directly into the housing market. Above all, they cannot wait until the Budget in November. Measures delayed until then will not take effect until next April and, by then, the damage to the Government may well be irreparable. The only step open to the Chancellor is partially to reverse his cuts in MIRAS. He must specifically recognise the problems faced by first-time buyers and the significant increase that they will face in entry costs and in higher mortgage payments, especially if he should give in to the Governor of the Bank of England next month and allow interest rates to rise again.
I put it to the Under-Secretary of State for the Environment, my hon. Friend the Member for Hertfordshire, West (Mr. Jones), that the Chancellor must immediately announce a package putting MIRAS up to £50,000 at the standard rate of 25p in the pound for first-time buyers. That is a constructive proposal. He should not time-limit it, but he should retain the option of withdrawing it once the economy and the market have responded to that stimulus. Such a measure would provide him with an excellent and effective regulator, which would be much more sensitive than interest rates, should the housing market need to be reined back at some future date.
To assist in that move and to restore confidence to first-time buyers and right-to-buy purchasers, the Secretary of State for Social Security should quietly and discreetly ditch the electoral millstone of his proposals to restrict mortgage interest support for the sick and the unemployed. My right hon. Friend the Secretary of State has many good reasons for doing so and I understand that the unpublished study on mortgage arrears and repossessions, which is currently sitting in the Department of the Environment, provides ample evidence of the need for a thorough reappraisal of the proposals that my right hon. Friend has announced.
The housing market stands at a crucial crossroads, and so do our economy and the political future of the Government. All are inextricably linked. Let us recognise that and listen to what the electorate told the Government on 4 May. Let us be clear—the British housing industry is among the best in the world. Hon. Members on both sides of the House know that, not least my hon. Friend the Member for Chorley, who has wide experience of the industry. It offers home owners a wide range of high-quality products at prices that are extremely competitive. Affordability is at good levels.
The main factor that is missing from the equation is confidence, the first emerging breaths of which are repeatedly stifled by policies from the very Government who, in the past, have sought to nurture home ownership as a major electoral asset—and it has been such an asset. This is a bizarre, reckless and, ultimately, politically unsustainable position and I hope that in the coming months the Government will realise the importance of

home owners and the need to encourage home ownership, and that policies to encourage and stimulate it will be introduced.

Mr. Tony Banks: I congratulate the hon. Member for Macclesfield (Mr. Winterton) on a characteristically robust speech. He is one of those hon. Members who speaks the truth as he sees it, which is probably why he has more admirers outside his party than within it.
Housing is a massive problem in my constituency and the hon. Member for Macclesfield identified the problem in other constituencies. In the London borough of Newham, it is at crisis proportions. More than 60 per cent. of all my case work involves housing in the private and public sectors, although essentially we are debating the private sector this morning.
It is difficult to be precise, but the best figures that I have been able to produce show that nearly 60 per cent. of private sector dwellings—about 26,000 in the borough—are unsatisfactory. That is twice as high as in Greater London as a whole. It is distressing to note that the percentage of unsatisfactory dwellings has risen since 1979.
In the latter part of the 20th century it is amazing to note that some 2,000 households in my borough still have outside WCs. I remember outside WCs when I was a young lad—they were a useful way of using up old newspapers, with the nail on the wall and so on. I remember going out in the cold: it was an unpleasant experience and can be spooky for a young kid. The idea that in 1995 2,000 households in my area of east London still have outside WCs is unacceptable. A total of 1,200 have no access to a bath. Overall 3,200 households in the private sector in Newham do not have exclusive use of either a bath or an inside WC.

Lady Olga Maitland: I am listening with interest to the hon. Gentleman's remarks about houses with outside lavatories. Will he confirm that people are entitled to a grant to ensure that they have inside sanitation?

Mr. Banks: No doubt the hon. Lady speaks with great personal experience of outside dunnies. An outside WC is one of the qualifying factors for a grant as is the absence of an inside bathroom—[Interruption.] The hon. Lady has asked the question and is now sitting there answering it, no doubt to her satisfaction but, unfortunately, not to the satisfaction of the rest of us who are trying to take a more objective view. As a result of various cuts, there is no money for improvement grants and there is an enormous backlog in the London borough of Newham. That is one of the complaints that I intended to make. The absence of an inside bathroom or WC is one of the highest qualifying factors for an improvement grant, but if the hon. Lady cares to come to Newham to see the backlog of those who are still waiting for such grants—and Newham is one of the most generous boroughs in the country for making improvement grants—she will realise the problem that we face. If we could solve the problem as easily as the hon. Lady suggests, does she not think that we would have already done it, for heaven's sake? I would not be here complaining and getting myself worked up so early in the morning because of the hon. Lady's facile intervention.
I was about to say something constructive but it has now gone out of my mind. I was going to comment on the fact that the number of houses without inside bathrooms or lavatories has declined since 1981 precisely because of the improvement grants that the London borough of Newham has been able to offer, despite which we still have the highest figure in Greater London.
The problem always comes down to economics. Newham is a poor area with a large low-income sector. A total of 50,000 people in the borough are on income support, many of whom are caught in the poverty trap. Two types of owner suffer disproportionately—the elderly and those with large families. I find it distressing and disgraceful to have to bring such statistics to the House's attention at this stage of our development. A total of 65 per cent. of elderly owners and 58 per cent. of owners with large families live in unsatisfactory housing.
One third of owner-occupiers in my borough have incomes of less than £10,000 a year and more than two thirds have incomes of less than £20,000 a year. Twenty two per cent. of owner-occupiers pay more than 40 per cent. of their net household income in mortgage payments. It is not surprising, therefore, that 10 per cent. find it difficult to meet mortgage payments and a further 19 per cent. find it very difficult. One in eight is in mortgage arrears and an estimated 1,500 households are in serious mortgage arrears.
The hon. Member for Macclesfield mentioned mortgage tax relief being increased. I am not happy about that. I can see what he is trying to say. There is a real problem in the housing sector, but we do not want to encourage taxpayers' subsidy in the owner-occupier sector. All those who have observed the housing market have said that we should reduce mortgage tax relief; therefore, the Government are doing something that other parties would support in general terms. Many devices would boost the housing market and they should be encouraged. For example, the Government could allow local authorities to spend far more of their accumulated receipts from the compulsory sale of council housing. That would give the enormous boost to the housing sector about which the hon. Member for Macclesfield is concerned. I am concerned that we should seek real growth in our economy from the manufacturing sector—the productive areas. People had a false sense of security.

Mr. Heald: The hon. Gentleman suggests that if capital receipts were available for building homes, they would in some way help the housing market, but surely the effect of the release of receipts would simply be an improvement in the construction industry. That would not help the underlying problems, described by my hon. Friend the Member for Macclesfield (Mr. Winterton), of negative equity, the lowering of prices and the depressing effect of the present situation.

Mr. Banks: It could help for the simple reason that it would free up the whole housing market. It would produce far greater mobility.
People are trapped in substandard private accommodation that their landlords or owners are perhaps loth to improve. If people were able to move out into new public sector housing, landlords or owners would have an incentive to improve the vacant property and put it on the market or employ it in some other productive fashion.
One has to look at the housing market in its totality rather than sector by sector. The fact is that there is little movement in the housing market. People find that they are trapped in the private sector or in the public sector by negative equity or simply because there is not sufficient housing stock available in the areas or sectors in which it is most required. We need to free up the public sector far more. By doing that, we would inject far greater vitality into the private sector as well.
I am concerned that the country's prosperity should not be based on people's feelgood factor and the price of their housing. People like a bit of house price inflation because they can draw on the equity if they are in an advantageous position. That money then moves through the economy. That is precisely how the Government boosted the economy in the 1980s. We are now paying the price, as the hon. Member for Macclesfield said.
What I really want to say in my brief intervention is that I want to see more responsibility in the private sector being taken by the building societies and banks. This evening, I shall speak at the launch of the annual report of the Bow county court advice service. It is an excellent service that helps people without representation in the courts who are suffering from the possibility of mortgage repossession and eviction. Through the intervention of the advice service, many people have been saved from having their house repossessed and being made homeless.
It upsets me when people constantly tell me in my advice surgery that because of the problems in the housing market they have suffered from negative equity, run into mortgage arrears, had their houses repossessed and want the council to rehouse them. The council has a statutory responsibility, but where is the responsibility of the lenders of the mortgage in the first place?
What is the responsibility of the banks and building societies? They just tell people that they have got themselves into a bad position, repossess the house and sell it on to get as much back as they possibly can of their original loan. Negative equity normally affects the person who took out the loan rather than the person or organisation that lent the money in the first place. The lenders get their money back. The council is forced to find housing for people who have been dispossessed of their owner-occupied houses. That pressure and the lack of mobility in the public sector put even greater pressure on local authorities.
I want banks and building societies to face up to their responsibilities. They lent the money in the first place and therefore they should take greater responsibility for trying to keep people in their homes in the private sector rather than throwing them out and leaving the local authority to try to rehouse them.
Housing is a serious matter that affects everyone. All hon. Members are fortunate enough to be well housed, but housing is one of the rights of our people. It is absolutely crazy that, as we approach the end of the 20th century, we still have thousands of families homeless in our cities and yet we have tens of thousands of unemployed construction workers and industries that are being laid to waste because of the failure of the housing market. There surely must be a better way to organise the housing market.
I hope that the Minister will seriously address the points made by the hon. Member for Macclesfield, because, as an independent and fearless hon. Member, he quite often speaks for all of us.

Mr. Den Dover: I congratulate my hon. Friend the Member for Macclesfield (Mr. Winterton) on raising this very important subject, particularly at this time, because, as he knows, in politics timing is everything.
The key word is "market". Too often, the large-volume house builders—my hon. Friend mentioned Joe Dwyer, the superb chief executive of George Wimpey—assume that there is a big market out there and that they have a God-given right to keep on building more and more houses. The fact is that, at the moment, people want to be able to buy houses, especially new houses. There is a much better market for new houses than for existing, second-hand stock.
However, the house builders must give better and better value for money. Sometimes, in a depressed market, such as we have had for the past few years, home owners are in a better situation. For instance, my stepdaughter and her husband recently purchased a house at the boom of the market for £45,000 in the west midlands. They had to sell it recently for £35,000 but, on the other hand, to upgrade to a house for which they would have had to pay £93,000 or £95,000 during the boom, they have had to pay only £75,000. That has meant that the market has continued to operate. They have been able to upgrade and, indeed, they are probably slightly better off.
In the country at large, there are huge differences. In the south-east, properties in the region have decreased in value by 25 or 30 per cent. There is a slight increase in their values at the moment, but that gap will perhaps never be made up.
On the other hand, out in the more realistic world of the north-west, as my hon. Friend the Member for Macclesfield knows only too well, and especially in the north, the rise in property values took place slightly later than elsewhere and never reached the crazy, ridiculous levels of the south-east.
I accept that there has been a slight reduction in property values in the north-west and north but it has been much smaller, perhaps 5 or 10 per cent. at the maximum. That means that there has been a more realistic approach to the value of properties in those regions. People have not overcommitted themselves and the market is now moving back towards some sort of sense of reality.
As I said, it is up to the builders to give better value for money. There have been all sorts of show house give-aways such as full sets of white goods, fridge-freezers, ovens, kitchen units and full bathroom fittings, as well as sanitary goods. Those offers are absolutely essential. I praise the efforts of the house building industry in getting its act together to give a very competitive product to buyers and in ensuring that it presents that product supremely well in all show houses up and down the country.
I never fail to be impressed by the presentation that house builders give in their show houses; it is a pleasure to go into them. House builders understand the needs of buyers. I am delighted at what they are doing.
The only interest that I have to declare is as a non-executive member of the board of Cosalt plc, which is engaged in the development of a waterfront site with some old, clapped-out factories. It had to reuse the site and decided to put in a new factory and an office block for various public sector tenants and to build four phases

of housing. The company put the deal together during the boom and thought that it was on to a sure-fire winner. However, since then the proposed selling prices of four or five years ago have gone down by 15 or 20 per cent. What is it to do in such circumstances? It has managed to get builders to do the demolition, construction and finishing work at much lower prices than it expected so its original construction budget will not be exceeded four or five years on, even allowing for inflation. In other words, building packages have been bought at much lower prices and that fact is reflected in the selling price.
In the private housing market, everything depends on the rate of sales—how quickly a company can construct a building and get purchasers to commit themselves to minimise its cash flow. I am delighted that the construction industry has been able to turn its operations around even in the difficult market of the past four or five years. Previously, we had runaway inflation and the industry made enormous—even unacceptable—profits. It had it too easy, but it has proved itself lively, on the ball and able to adapt to changes. It now gives better value for money but I would still criticise house builders in one respect.
Up to a couple of years ago, house builders kept buying land as if there were no tomorrow, possibly doubling land values. That was a sure-fire way of ensuring that they would be crippled by having too much land stock without being able to provide houses at affordable prices. In fact, they are their own worst enemies in many cases.
What action can the Government take? We have already heard about the difficult political situation in which the Government find themselves with only two years to go. I join those who say that the reduction in mortgage interest tax relief has been introduced too quickly. To reduce it by 5 per cent. a year on a ratchet system means hardship for some house buyers. However, whereas we reached a peak of mortgage interest rates of 13 per cent., 14 per cent. and even 15 per cent., they are now at a more realistic and acceptable 8 per cent. In other words, buyers are now paying less, even allowing for possible tax increases and the reduction in mortgage interest tax relief, and not doing too badly at the moment.
Should the Government intervene and falsely stir inflation into the equation? I do not think so, although I accept that we all feel better if the value of our house, which is our main asset, is increasing month by month, year by year. I applaud the Chancellor's courage in holding out against further interest rate rises in the past week or so. I hope that sterling's performance against the mark and the dollar confounds all the critics and that we might already have reached the interest rate ceiling of the current cycle. That would be marvellous news.
It is not in the interests of individuals, the housing market or industry for interest rates to continue to increase.

Mr. Mark Robinson: Does my hon. Friend agree that the purchaser needs stability and to be sure that interest rates will not change as much as they have over the years, even if it means not reducing them so far? Would it not be better if we perhaps had more stable bands of interest rates as in Germany?

Mr. Dover: I could not agree more. If interest rates have already reached their ceiling with three responsible and small interest rate increases in the past few months, I believe that my hon. Friends suggestion would be


acceptable to industry at large, to individual home owners and the housing market. I agree that we need stable interest rates and stable inflation, which are closely linked. The Government's targets are set in concrete, so to speak, and we are pursuing and achieving our inflation rate target. We must certainly use the interest rate indicator at all times but we must bear in mind the economy as a whole, not only the financial markets.
I deal now with the definite benefits that flow from home ownership. Home ownership is an investment for a first-time buyer, someone who is upgrading and someone who has reached the peak of his housing ambitions. That contrasts markedly with the plight of people who have spent decades paying rent that has simply gone down the drain.
It is unfortunate that more people cannot be motivated early in life to get on to the house-buying ladder. Any Government action needs to concentrate on first-time buyers, who stimulate demand. I urge people to have confidence and to continue to become home buyers and owners. We can achieve the flexibility that we seek in the housing market without nationwide rented accommodation, although I am all in favour of providing council houses for those who are sick, poor or in urgent need.
I agree with the hon. Member for Newham, North-West (Mr. Banks) as I have always supported the use of capital receipts. They need not necessarily be used to build new local authority housing stock but could certainly be used to improve their existing housing stock. However, if the Government allowed much greater use of capital receipts, would the money be well spent or would it add to public spending and debt and increase interest rates? What would it be used for?
In the local elections, we received the strong message that we were wholly out of favour. Some people argue that we should remove the reins from local authorities and stop capping their spending. I believe that it would be sensible to allow them to use their capital receipts for what they want but it would mean that their deposits of capital receipts, if they have any, would not be earning interest. They would have to convince council tax payers that they were doing something worth while on their behalf because some of their income would be lost and they would undoubtedly have to increase the council tax, which might mean they lost favour.

Mr. Simon Hughes: The debate is very welcome, and I am grateful to the hon. Member for Macclesfield (Mr. Winterton), who comes from the proud county of my birth, for speaking so strongly, as people from that part of the world usually do. I hope that this will be a prelude to a longer debate in Government time as housing is probably the issue that most affects people's sense of security. Homes and jobs, which are closely related, are matters of great concern, and probably more so now than for many years. We have heard two contributions from hon. Members representing northern constituencies and I join the hon. Member for Newham, North-West (Mr. Banks) in making a contribution from the south.
My constituency begins literally a mile from here. In Southwark, housing policy across all sectors is nothing short of disastrous. There is a crisis not only for those

seeking accommodation in the rented sector, but, increasingly, for those seeking to buy or who have bought. I flag up immediately those who have gone into shared ownership and find that they can no longer sustain it but cannot get out; those who bought under the right-to-buy scheme, some of whom have recently been presented with bills of £27,000 for capital charges—as the people involved are a pensioner couple with no capital, it means that they cannot pay and that their home may cease to be their own—and people who were often forced to buy, thinking that they could just manage the purchase when the market was at its highest in the 1980s but have since seen the value of their homes drop by nearly half in some dockland areas—the price of a terraced house there has dropped from over £100,000 to about £60,000 or £70,000. Their negative equity has turned into not a slight deficit but an extraordinary liability.
The practical problem for many people is whether they will be able to keep their homes as their jobs become less secure. Therefore it is urgent that we get the policy right. The phrase that came to mind, which I suppose was prompted by the VE day background to the debate, was that never have so many owed so much—not to so few, but simply owed so much. People are desperately worried about the implications of that.
We could all cite a litany of problems, but we are here to suggest some solutions, too. There is the problem not only of about 1,000 repossessions a week and the fact that almost 500,000 people are three months behind in their repayments, but that there are increasing bills and the prospect in the autumn of reduced security to help people pay for mortgage interest if they are on income support or other benefits.
Additional uncertainty about interest rates and about the future of mortgage interest relief at source—whatever one's views—does not help.
May I make the point as strongly as I can, from a constituency which is ranked in the top five for unemployment in the country, that the best way to get people back into work is to boost the construction industry? It is proven to be the best way to get more people at all levels of skills back into work more quickly. Self-evidently also, the more people are in work, the more people can better afford their homes. We should encourage not only new build, although the hon. Member for Chorley (Mr. Dover) is right to say that there are some very good newly built properties that are well presented, but renovation, modernisation and home improvement. If we want to reduce unemployment significantly, there is no better way than to boost the housing sector.
There has always been intervention in the housing market, incentives and disincentives and a debate about how to control it. We have never left matters entirely to the marketplace. I was on the Standing Committee on the Housing Bill in 1988 when the Government legislated their policy of reducing subsidy. People predicted then, that instead of subsidy being provided by the Department of the Environment, the Department of Social Security would increasingly have to pick up the bill. All hon. Members now see graphs that show the balance changing from subsidy of the buildings to subsidy of the person. There has been a huge reversal and it is unsustainable in the long term. What should be done?
First, we need a partnership between funding through subsidy by the taxpayer, whether by mortgage tax relief or other forms of subsidy, and funding through the private


sector. That partnership, especially in shared ownership and the rented sector, must be achieved to provide long-term security. Secondly—I agree with the speeches of the hon. Members for Macclesfield and for Chorley—the housing market has been nonsensical over the years because the most difficult time to get finance has been when one most needs it: when one starts out. Indeed, getting finance becomes easier for people when they least need it, when their income is more secure and their children are off their hands. Nor do we adequately look after people nearing the end of their lives who do not want responsibility, or cannot afford it, but want to stay in their own homes. We must not forget that issue.
We must ensure that we do not distort incorrigibly in Britain the balance between renting and owner-occupation. We have always made a theological distinction between those two forms of housing in this country, which does not exist in other countries. My party has long argued that people should be given housing credit and that it should be applicable equally to the rented and the private sector. Area by area and local authority by local authority, we must respond to local need and demand. The housing mix and the allocation of land should be influenced by what people want; dependent on whether they want to buy or rent.
I hope that hon. Members will take away the following theme from this debate. We should not only consider people who are taking up the right to buy or have started to buy their own home. What we need most is a policy which provides security and stability. Only in that context can people plan and make commitments. I hope that the Government will seek the widest consensus over the next few weeks and months. People can be overly partisan about housing policy. The best housing policy is one which is secure over the remaining period of this Administration and into future Governments. Only in that way will the voters and those who want, need and buy homes, thank us for being sensible about giving them security for the future.

Mr. Oliver Heald: I congratulate my hon. Friend the Member for Macclesfield (Mr. Winterton) on initiating this important debate. There is no more important issue in politics. Home ownership is one of the most deep-rooted ambitions of many people in Britain. All the surveys for many years have shown that 80 per cent. of the population aspire to owning their own home. One of the successes since 1979 has been the rise in home ownership from 45 per cent. to almost 67 per cent. I do not think that the difficulties of the recession in the housing market and negative equity have changed the essential desire among people in the United Kingdom to buy their own homes. In fact, under the right-to-buy scheme, about 1,000 properties are sold each week.
I could not agree more—unusually—with the hon. Member for Southwark and Bermondsey (Mr. Hughes), who said that, as a country, we owe security and stability to people who have the deep ambition to own a home and have perhaps saved over some years to get together a deposit to buy a house. If the housing market is like a roller-coaster, it will not meet those aspirations. So it is right to go for a policy on housing which provides security and stability.
I do not have enough time to say much about the distress and anxiety felt by those in negative equity. In the eastern region, there are something like 70,000 homes with negative equity. Indeed, we have all seen constituents in surgeries who have found saving up, buying a home and then finding that its value has fallen one of the most distressing events in their lives. I accept the point that my hon. Friend the Member for Chorley (Mr. Dover) makes about moving up in the housing market and the possibilities of lower price. He is right and the lowering of interest rates has been welcome. For the future, we should learn from the lessons of the past. We should try to achieve steady growth in house prices and not an inflationary, expansionary boom, which raises expectations and is—frankly—illusory.
There is some good news. I am not saying that the market has completely rectified itself, but it is noticeable that the number of households with mortgage arrears of more than six months has fallen substantially in the past year. It is down by 21 per cent. Certainly in the eastern region, house prices are beginning to rise. There was a 1.6 per cent. increase in the first quarter of this year. That trend has been continuing for well over a year and it is also reflected in the national figures, which I do not believe are as gloomy as one or two hon. Members have said.
Since the end of 1992, through 1993 and 1994, the Department of the Environment mix-adjusted house price index shows, quarter on quarter, year on year, an increase of between 1 and 2 per cent. Although that is not dramatic, it is in the right direction. For new houses, as my hon. Friend the Member for Chorley said, there has been a more noticeable increase. In the eastern region, in every quarter since the end of 1993, new house prices have been rising and, in the most recent quarter, they have risen by 4.3 per cent.

Mr. Nicholas Winterton: I am grateful to my hon. Friend for considering the national position. Perhaps we can do no better than to quote the Halifax building society. Its house price index shows that prices are down by 1.5 per cent. in the year to April 1995 and that there has been a cumulative decline of between 10 and 15 per cent. since 1990. Indeed, the Council of Mortgage Lenders says:
Depending on the house price index used, between 7 and 10 per cent. of mortgage holders have negative equity.
Surely that shows the serious problem that I was seeking to highlight in my opening remarks.

Mr. Heald: I hope that my hon. Friend will agree that I have not sought to minimise the difficulties. If he examines the mix-adjusted house prices indices, which give the recognised national figures, he will see that at the end of 1992 the index stood at 92, whereas it now stands at 94. So far as I can see, it has risen to some extent in every quarter over that period.

Mr. Nick Raynsford: The hon. Gentleman must be desperate.

Mr. Heald: The figures are provided by the Library, so they cannot be far wrong.
I believe that the real solution lies in sustained economic growth in the economy at large, with low


interest rates. I entirely agree that we must have low interest rates in Britain if the housing market is to pick up and the construction industry is to thrive, and I hope that the Chancellor of the Exchequer will continue his robust stance on that matter.
Finally, if we come to the point where tax cuts can be made we should consider whether we can provide married couples with some extra assistance, so that we can build on the building block of the family. Many of the families in negative equity are young married couples, and I should like them to have extra relief.

Mr. Nick Raynsford: I begin by declaring an interest as a consultant to HACAS, the social housing consultancy, but I stress that I have no financial interest in the subject of the debate—other than that which, I guess, every other Member of the House shares, as a home owner whose property value may be affected by trends in the market.
I congratulate the hon. Member for Macclesfield (Mr. Winterton) on his success in securing this important debate on the state of the housing market. I agree with almost everything that he said in his analysis, which was a trenchant and accurate assessment of the parlous state into which the housing market has fallen.
We all know that, despite frequent promises of green shoots, the private housing market has failed to show any sustained recovery from the recession. Clearly the market is jittery and consumer confidence is low. The number of transactions has been way below the level that might have been expected, given the historically favourable ratio of house prices to incomes.
That is not simply a case of a recovery being stalled. The evidence from the first three months of 1995 shows falling demand and falling output. New house building starts in the first three months of this year are 8 per cent. down on the equivalent three months of last year—a period which itself delivered a rather disappointing output. Even more worrying is the National House-Building Council's evidence that applications for new starts are 17 per cent. down on the equivalent quarter of 1994.
Those figures reflect a seriously depressed market, and do not support the arguments advanced by the hon. Members for Chorley (Mr. Dover) and for Hertfordshire, North (Mr. Heald), who seemed to assume that the market was making a slow recovery.

Lady Olga Maitland: The hon. Gentleman seems determined to prove that the market is collapsing, even in the face of information to the contrary. I wonder whether he is aware of a press release by the estate agent Barnard Marcus, which has conducted a survey of properties in west and south-west London. For each category surveyed Barnard Marcus uses phrases such as:
Optimism has returned … if a house is well presented and realistically priced, it will sell without too much difficulty
In east Surrey, apparently:
The market is very active at present",
in south-west London:
house prices in general have increased",
and in Middlesex:
New homes sales are increasing".

How does the hon. Gentleman equate all that good news with his attempts to knock the market down?

Mr. Tony Banks: That is their selling technique.

Mr. Raynsford: Yes, the hon. Lady is confusing two things. One is the selling technique of estate agents in south-west London, and the other is the evidence available from every source, including the corporate estate agents with records from all over the country, that shows demand for housing falling. The hon. Lady is talking nonsense, as usual, and is not reflecting the real state of the housing market.
Why is the market in that parlous state? Essentially, there are three explanations. First, the recession of the early 1990s has had a long-lasting and traumatising effect; in the past five years 295,000 families have lost their homes through repossessions, and 1.2 million are still trapped in negative equity. It is hardly surprising that those human tragedies on a massive scale have cast a long shadow over the market. Hundreds of thousands of families are simply not taking the risk of buying a home or of moving, for fear of falling into debt.
The second factor, as was highlighted by my hon. Friend the Member for Warley, West (Mr. Spellar) in his brief intervention, is the impact of changes in the labour market. Uncertainty is caused by more than the fact of a continuing high level of unemployment; the fear of unemployment runs deep among many people who are currently in work. Few people now feel confident that their job will be around for the 25-year duration of the conventional mortgage. The increasing use of short-term contracts also adds to the uncertainty that inevitably inhibits people from taking on new mortgage commitments.
The third factor is the rising cost of mortgage repayments. Increased interest rates, two cuts in MIRAS and the threatened cut in the income support safety net that will force home owners to take out expensive private insurance, have all contributed to a substantial increase in home owners' costs. The costs involved in servicing a mortgage on the average-priced house will have risen by a staggering £830 between January 1994 and October 1995. With the fear of further interest rate rises adding to the misery, it is hardly surprising that the housing market is now showing a serious downturn.
The Government bear a large measure of the responsibility for that situation. They created the unsustainable boom conditions of the late 1980s, which led inexorably to the disastrous crash of the early 1990s. They encouraged people to buy their own homes, often overstretching themselves in the process, with pledges of continued Government support—pledges that have now clearly been broken, as is pithily stated by the Council of Mortgage Lenders in the evidence that it sent to hon. Members for the debate.
The Government promised to retain MIRAS. Although some commentators would question the wisdom of that pledge, it was nevertheless a firm commitment. To break it now, when so many home owners are in serious financial difficulty and market confidence is so fragile, is not only an act of betrayal but an ill-timed intervention, damaging the market and forcing up home owners' costs.
To add insult to injury, the Secretary of State for Social Security has come up with his half-baked proposals to cut the income support safety net, supposedly to make savings


that on closer inspection turn out to be derisory. There are few clearer illustrations of the Government's loss of touch. They seek minuscule short-term savings, while causing immense damage to market confidence and leaving hundreds of thousands of home owners fearful about the future.
To complete the sorry picture, there has been a parallel cut in Britain's social housing programme. Local authorities are now to all intents and purposes prevented from building new homes, and housing association output has been savaged by two successive years' cuts in the Housing Corporation budget. The outcome, hugely damaging to hundreds of thousands of people in need and to our hard-pressed house building industry, has been to reduce the number of new rented housing starts in 1995 to the lowest level since the end of the second world war. As my hon. Friend the Member for Newham, North-West (Mr. Banks) said in his important speech, that has left many people living in unsatisfactory housing conditions, both in Newham and elsewhere.
When the health of the housing market is such a major component in the feelgood factor, and with a general election fast approaching, one would have imagined that the Government, fresh from their remarkable performance in the local elections, might have second thoughts about pursuing what appears to be a suicidal policy.
The truth is that the Government are caught in a time warp, driven by the fear of a lurch back to the bad old boom-bust cycles for which they were largely responsible. They are right to want to avoid unleashing another unsustainable boom, but they are wrong in failing to recognise that economic circumstances in the mid-1990s are light years away from those that applied in the late 1980s boom. The danger in the present situation is not that recovery in the housing market will spark off an unsustainable and damaging inflationary spiral, but that the housing market will not be allowed to recover because Treasury Ministers, like the generals in the first world war, are too busy fighting yesterday's battles rather than understanding today's circumstances.
I do not care if the Treasury mandarins—aided and abetted, as the hon. Member for Macclesfield rightly said, by the Governor of the Bank of England—encourage Tory Ministers to rush lemming-like over the cliff of electoral extinction, hotly pursued by many of those who currently sit on the Government Benches. However, I care passionately about the misery being caused in the lives of millions of our fellow citizens by the callous, incompetent and pig-headed policies being pursued by the Government.
We have a responsibility to act to protect the interests of the hundreds of thousands of home owners laden with debt and in fear of repossession. We have a responsibility to act on behalf of more than 1 million households who are trapped in negative equity and are unable to move home, and who have a continuing millstone of debt around their necks. We have a responsibility to act to rescue the beleaguered house building industry, which has been ravaged by the impact of more than five years of recession in which more than 500,000 construction jobs have been lost.
We have a responsibility to act in the interests of the British economy, in which the house building and construction industries play a crucial part. Restoring

confidence in the market and expanding our hopelessly inadequate social housing programme will not just be good for housing in Britain, but it will be good for all those in jobs which, in one way or another, depend on a thriving industry—people who make bricks and tiles; people who manufacture kitchen and bathroom units, central heating boilers and fittings; people who manufacture doors and windows; people who weave carpets and curtains. All these, and many more, stand to benefit from a revived housing market. Many hon Members—including the hon Member for Southwark and Bermondsey (Mr. Hughes)—have rightly pointed that out.
In the interests of Britain and the British people, we call on the Government to reverse their misguided and damaging policies towards the housing market. We urge them to abandon their ill-thought-out proposals to cut income support, and we urge them do the U-turn which is vital to send the signal which the market so desperately seeks. I warn the Government that if they do not do that, they will pay a heavy price.

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert B. Jones): It was curious that the hon. Member for Greenwich (Mr. Raynsford) chose to have a swipe at the Governor of the Bank of England in his speech, since his hon. Friend the Member for Dunfermline, East (Mr. Brown) was recently talking about giving the Bank more control—not less—over interest rates and monetary policy. No doubt that debate will take place on another day.
Today's debate has been interesting, and the speeches have highlighted the complex inter-relationship between the many factors which affect the housing market. We heard some thoughtful speeches, particularly from my hon. Friends. But while I did not agree with every point that the hon. Member for Newham, North-West (Mr. Banks) made, I thought that he hit one or two nails firmly on the head. I take seriously the question of housing renovation, and I would welcome a discussion with him on the matter on another occasion. Like the hon. Gentleman, I began life with access only to an outdoor loo. Unlike him, however, I had one other hazard. When I stayed with my great aunt Linda in North Carolina, I had to bang loudly on the outdoor loo with a stick to dislodge the rattlesnakes, which one had to do if one did not want to end up with a greater vulnerability than one would have had in Newham or Bedford.
Perhaps we do not get enough opportunities to discuss the housing market, because it is an important subject. While I recognise the concerns which my hon. Friend the Member for Macclesfield (Mr. Winterton) has set out, I cannot share his overall assessment of the situation. I want to start by reaffirming the Government's complete commitment to sustainable home ownership. Owner-occupation remains the tenure of choice of eight out of 10 households. I am not surprised by that, even after the experience of the recent unsustainable boom.
Buying a home remains a sensible investment for most families. It is an investment not in the speculative, get-rich-quick sense, but an investment in choice, independence and control. It is also an investment in security, particularly later in life when mortgages are repaid. That is why home ownership has grown from 56


per cent. to 68 per cent. of all housing tenures since 1979. That is why it will continue to grow in both market share and volume.
Concern has been expressed this morning about the possible effect of the proposed changes to income support for mortgage interest. There will be an opportunity shortly to debate these proposals more fully when my right hon. Friend the Secretary of State for Social Security places his final proposals before the House. In the meantime, I would like to make two points. First, the existence of an insurance market will of itself help build confidence, and secondly the fact is that even under the present arrangements, an estimated 70 per cent. of home owners would not be entitled to state help.
What is needed is comprehensive, high-quality and reasonably priced insurance products. That need exists even under present arrangements. Until now, these products have not generally been available. Many critics have said that this will not change, and that the insurance industry cannot cope. It is important that the new insurance products which emerge should address the realities of the changing labour market, particularly as we move away from traditional patterns of employment. This represents a significant challenge, but we believe that the industry can and will rise to that challenge.
I am pleased to say that the signs are that, in part prompted by the proposed income support changes, a more positive and innovative approach is emerging from the insurance industry and the house builders. That said, it has been recognised from the outset that insurance can provide cover only for a limited and finite period and cannot cover certain eventualities. My right hon. Friend has made it clear that he will consider very carefully the need to continue to protect those whom insurance cannot reasonably cover.
On the question of mortgage interest tax relief, the staged reduction of the MIRAS rate from 25 per cent. to 15 per cent. has increased monthly mortgage payments by £20 at most. This needs to be compared with a £130 reduction in average monthly mortgage payments resulting from interest rate reductions since October 1990.
I said that we continue to support sustainable home ownership. Indeed it remains our policy to extend home ownership. Through the right to buy, shared ownership, cash incentives and other low-cost home ownership schemes, we are enabling over 200 social sector tenants a day to become home owners. It has been suggested that the success of these and other initiatives to encourage marginal first-time buyers are at risk through the increased costs of owning a home. It is not our policy to encourage people to be unrealistic about what they can afford. That is not sustainable home ownership.
Several hon. Members have referred to first-time buyers, but it is worth making the point that it is clearly not affordability which is restraining the market. The National House-Building Council first-time buyers ability to buy index is at the highest level since its introduction over 20 years ago.
I am very conscious of the problems being experienced by some home owners—particularly those in arrears with their mortgage, and those with negative equity. These problems will not disappear overnight. But the success of Government policies in securing sustained economic growth, increased employment opportunities and low

interest rates means that fewer people are now likely to get into difficulty with their mortgage payments, and those in arrears are more likely to be able to pay them off.
Figures published by the Council of Mortgage Lenders show that the number of households in arrears of six months or more at the end of 1994 was down 21 per cent. on a year earlier. The number of households affected by negative equity has fallen by 44 per cent. since the 1992 peak. The number will continue to decline as house prices edge upwards. South-east England, where the negative equity problem is most concentrated, has now seen modest house price increases for six consecutive quarters. In the meantime, I am pleased to note that most of the main mortgage lenders now have arrangements to assist borrowers with negative equity who need to move home.
I know very well that recent market conditions have caused concern to the house building and building materials industries. This is a vast sector of British industry, for some 43 per cent. of the total construction market is housing-related.
There is no doubt that house builders have had a difficult time over the last few years. The total number of new house starts fell by nearly 40 per cent. between 1988 and 1992. Although there have been some improvements since then, the industry has regained nothing like its old confidence. Last year was a good one for the industry, by and large; starts were up by 13 per cent. and the total volume of output increased by 7 per cent., but many builders were hoping for a much more significant upturn.
In the early months of 1995 builders were scanning the horizon for the long-awaited resurgence in the private market. Nobody is suggesting that there is a boom at the moment, or anywhere near that. Housing market activity is generally rather lower than last year, and prices are scarcely moving from month to month.
In the nature of their business, house builders have to make considerable investments—in land, materials, machinery and people—well ahead of public demand. The housing market is not an easy one to judge. Understandably, builders have looked with concern at increased interest rates and changes to MIRAS and benefit arrangements, although these factors alone should not make much difference to the market. Nevertheless, they are part of a pattern of uncertainty, and I recognise that markets are critically sensitive to that. We are emerging from a period of many such uncertainties. The last few years have seen the firm establishment of a low-inflation economy. Housing remains a solid investment, but it is no longer a get-rich-quick gamble. That must be good for house building in the longer term, but the market is taking time to adjust to the new realism.
While unemployment continues to fall, a significant proportion of prospective buyers have been affected by unemployment over the past five years. Many of those in work are adjusting to more flexible employment arrangements, such as fixed-term contracts. In the longer term, these changes are good for the economy and the housing market. Builders need a strong, stable, responsive economy and a healthy and responsible attitude to home ownership. No one should regret it if we do not see so much of boom and bust in future. But there has undoubtedly been a hiatus and the market is taking a long time to pick up—longer than many expected and hoped.
House builders can do much to encourage a new spirit of enthusiasm for home ownership. A good product at a good price will always be the prime incentive, and there


is plenty of evidence from the last few years that new housing is more popular than ever. Builders rightly look to the Government to advance the cause of home ownership for all the undoubted benefits that it brings, and we intend to do our best to encourage it.

Maritime Industries

Mr. Ian Davidson: This is the first debate that we have had for some time on the shipbuilding, ship repairing and other maritime industries. I hope that it will be the first of several exchanges to take place both here and elsewhere within the House on this important issue, because it is widely recognised that important changes have taken place in the industry over the years: it has been rationalised, privatised and then rationalised again, and it now bears no resemblance to the traditional image of shipbuilding as an old-fashioned rust bucket industry. Instead, it is a high-tech, high-skill, high-investment industry in which Britain needs to play a part in future.
For both industrial and national defence reasons, it is important that we safeguard the shipbuilding industry and do all that we can to ensure its success. Given the projected increase in the world market for shipbuilding, we must ensure that the UK gets its fair share of future orders. Hon. Members on both sides of the House should agree that we need a partnership between the public and private sectors to ensure that the industry does as well as it can. In those circumstances, the private sector's role is to ensure that the industry is efficient, adequately financed and resourced, and in a position to compete and win orders. The public sector's role is to ensure that the competition which the industry enters into is fair and that there are no hidden subsidies or support elsewhere.
Although the privately owned industry is efficient thanks to the efforts of management and unions, the danger is that it will not win orders abroad in the magnitude that its efficiency warrants because of unfair competition. There must be a level playing field or, more appropriately in these circumstances, a level swimming pool. If the effect of a tilted playing field is significant, hon. Members will realise that the impact of a tilted swimming pool is even more substantial if one is trying to swim uphill. We need a market that is fair and regulated, and we must establish that the rules are the same for everyone.
I wish to raise three major areas of concern. First, the world market is likely to be substantially affected by an unwarranted expansion of the Korean shipbuilding industry. South Korea caused a glut in the industry by its tremendous expansion during the 1970s. That led to a refinancing requirement in the 1980s, when the industry had to be bailed out by the South Korean Government. The South Koreans now propose a tremendous increase in their yards, which is not warranted by their financial circumstances. The South Koreans are showing that they are willing to buy market share using Government subsidies, both direct and indirect, which involve free and heavily subsidised financial packages.
Do the Government accept that that is the position and, if so, what do they intend to do about it? There is no point in British industry making great efforts to increase efficiency if it is to be beaten by unfair competition by foreign yards. The South Koreans have clearly decided that they have a strategic industry and want to take their share of the market in shipbuilding, but they should not be allowed to drive out British yards by unfair competition.
My second concern is about state aid in Europe. Germany is clearly prepared to pay a substantial amount for reunification, which involves propping up,


modernising and investing in east Germany. The impact of that on the shipbuilding sector is to give German yards an unfair advantage over their competitors. Substantial allegations have been made that German yards are winning orders at, effectively, below real costs. I should be grateful to know whether the Minister accepts that assertion and, if so, what he intends to do about it.
Elsewhere in Europe, publicly owned yards that still operate as part of the nationalised sector, particularly in Spain and Italy, receive concealed Government subsidies to allow them to bid for orders abroad. The Minister will be aware of the current competition for orders from the South African navy. This may not be the appropriate time to discuss the details of that, but there are grave concerns about whether the Spanish competitor has an unfair advantage over Yarrow on Clydeside. I hope that, once that order is resolved, the Minister will be prepared to look into that issue.
Similarly, France has just received substantial assistance, which has been agreed by the EC, for restructuring. The danger is that that money will be used not to restructure but to buy orders. The Minister will be aware of recent reports that the Royal Caribbean order of two vessels at some $270 million each involves a subsidy of approximately $130 million per ship. With that level of subsidy, any British yard seeking to compete without state support cannot do so. That differential is so enormous that fair competition can be achieved only by ensuring that there is equality.
My third area of concern is ship financing schemes. It is widely believed that Norway outside the EC and Germany, Denmark and Spain within it have better finance schemes than those allowed by the UK Government. If the Minister accepts that that is the position, what does he intend to do about it? David Smith, president of the Shipbuilders and Shiprepairers Association, and members of that association have raised that matter with the Minister and intend to meet him in future to pursue that important question. In reflecting the industry's concerns, the shipbuilding industry, its management and unions, are noticeably not asking to be propped up or subsidised. They simply ask the Government to ensure that competition with Europe and the rest of the world is fair because they believe that the strenuous efforts that they have made to make the industry more efficient should be rewarded by the opportunity to compete fairly.
I could go into great detail, but I recognise that this is not the time to do so because many other hon. Members wish to contribute to the debate. I hope that the Minister accepts that it would be more appropriate for him to meet a delegation to discuss those points in detail so that they can be more fully explored.
On military procurement, with the ending of the cold war, this is a time for industrial regrouping and alliance forming throughout Europe and the world. While it is not entirely clear whether that regrouping will be on an international or national basis, or whether it will be because of takeovers, industrial alliances or partnerships, it will none the less take place. The Government have a clear responsibility to ensure that Britain's national defence and strategic interests are protected and that that is not left simply and solely to the market.

Ms Rachel Squire: I support my hon. Friend's remarks. Will he join me in welcoming

today's expected announcement that two additional submarines are to go to Rosyth royal dockyard for refitting, which will help to guarantee 1,000 jobs? Does he also agree, however, that, first, it is vital for the defence interests of our country that Rosyth receives the contractual guarantees for surface ship work that were promised to it? Secondly, does he agree that the Government should adopt a procurement and industrial policy that secures what is left of our shipbuilding and ship refitting industries and recognises their vital role in the defence of the country?

Mr. Davidson: I agree. I hope that the Minister also agrees. It is extremely important that we ensure that any industrial rationalisation guarantees that our industrial and military capacity follows our defence policy and does not lead it. We do not want a repeat of the situation during the Gulf war, when the Belgians refused to sell us ammunition because they disagreed with our policy in that conflict. That decision could have had a horrendous impact upon our ability to exercise what we considered to be our national interest. It is important that our military shipbuilding capacity is preserved so that we can guarantee our ability to implement any policy on which we determine.
Given the limited time available to me, I shall not discuss what will happen at VSEL, but, in future, I hope that the Minister will be prepared to discuss that matter, either privately or in public, with interested Members. My hon. Friend the Member for Dunfermline, West (Ms Squire) has already referred to Rosyth, so I shall say nothing further about it or Devonport.
Sea safety is a relatively minor point compared with the sweep of issues that I have raised, but it is worth considering. It is in our national interest to ensure the highest possible safety standards for our mariners and the cargoes that come to our country. I hope that the Government will press as hard as they can to ensure that those high standards are maintained by all ships that come to our country. I hope that they will also do what they can to ensure that the shipbuilding and ship refitting industries are able to benefit from the commercial opportunities offered by such safety work.

Rev. Martin Smyth: I am following the hon. Gentleman's arguments carefully and I agree with everything that he has said. Does he agree that there is great concern throughout the industry that the Government are not paying enough attention to safety standards? As a result, we could lose our seat at the international conference that established the maritime safety conventions. The Government are failing to safeguard the rights of British people employed in the industry worldwide, who sometimes have to take orders from political commissars in contravention of those conventions. I believe that one of our representatives at the conference is a low-grade civil servant, who has little understanding of the industry. Surely that reflects the Government's concern about safety.

Mr. Davidson: I am grateful to the hon. Gentleman for raising that extremely important point. I am sure that the Minister will refer to it in his response, but I hope that he will not do so at such length that the answers to my questions are squeezed out.
The environmental benefits of sea travel are worth noting, particularly when so much concern has been expressed about road traffic and the fumes that it causes.


People should realise that sea travel, particularly cabotage, is an environmentally friendly method of moving goods around the European Community. The Government should encourage that practice wherever possible and ensure that our shipbuilding and ship repair industries take advantage of the related commercial opportunities.
The fact that so many other hon. Members want to take part in the debate demonstrates the importance that so many of us attach to the shipbuilding industry. I hope that this debate will not be the only occasion when shipbuilding, ship repair and other related industries are discussed in the House.

Mr. Gary Streeter: It is a pleasure to follow the hon. Member for Glasgow, Govan (Mr. Davidson), who led off this important debate extremely well. I find myself in the rather unusual position of agreeing broadly with almost everything he said—that spells the end of his political career. He was right to refer to competition, which is at the heart of shipbuilding and related maritime industries.
I must declare an interest as I am a partner in the law firm, Foot and Bowden, which has a large shipping department. I am not, however, directly involved in that work.
I am particularly proud to take part in the debate given the vast maritime history of the city of Plymouth. It is the city of Drake and of the Pilgrim Fathers, who set sail from the Mayflower steps. It still has strong maritime connections, because it is the home of the world-famous Devonport dockyard and naval base. It is the city of Millbay docks, from which Brittany Ferries takes passengers to France and Spain. It has a substantial fishing fleet and a waterfront and yachting facilities beyond compare in the United Kingdom. We hope to contribute to that maritime heritage with a national maritime aquarium. That will combine Plymouth's maritime history with our hunger for knowledge and the research carried out by the expanding and extremely successful university of Plymouth. I am sure that that aquarium will become a world-famous focal point. I look forward to its opening.
Maritime history is not just in the blood of Plymouth people but, as an island race, it is in the blood of all of us. Perhaps that is why we have a slightly different concept of the European Union than our continental partners. Perhaps, because of that, we do not want to participate in full economic and political union, unlike some of our European partners. We cannot buck not just the market, but our geography and our history.
I have an enormous sympathy for any hon. Member who represents a community in which an established and traditional industry has declined. That has happened over the centuries for a variety of reasons. Sadly, I represent such a community. When I first arrived in Plymouth in 1980, 13,500 people were employed at Devonport dockyard. That number has now fallen to 4,000. I accept that the industry was subject to overmanning in the old days and that naval requirements have changed, but that does not make it any easier for the people in that local community to cope with such downsizing, as the Americans call it. I understand the anger of the communities that have to cope with the huge impact of the decline of their traditional industries.
It is important to consider the Government's proper role in such circumstances. It is interesting that the hon. Member for Govan did not, to his credit, call for the loss-making industries to be propped up by taxpayer subsidy. He called for fair competition. That is the right approach. It is for the Government to ensure fair competition so that our shipbuilding and ship repair yards operate on a level playing field, or in a non-tilted swimming pool, with other shipyards throughout the world. I am not convinced that that is happening now. It is important that the Government do not allow competitive tenders for naval ship repair work to go to yards outside Britain, because it would be wrong for European shipyards to do such work. There is a real fear that the Government subsidies enjoyed by some shipyards on the continent enable them to compete more fully than our yards.
I was pleased that the hon. Member for Govan mentioned the Korean shipbuilding industry. Let me put down a marker on the subject of global free trade. In theory, we probably all support the concept, and if there were indeed a level playing field—as there doubtless will be in due course—such market conditions would of course be right; but the subsidies provided by other Governments, wage levels in other countries and all sorts of strange working practices make the road to our alleged goal of global free trade a rough and rocky one. Let us have competition by all means, but let it be fair.
I welcome the agreement reached by the Organisation for Economic Co-operation and Development in September 1994, which insists on the phasing out of subsidies for other shipbuilding yards and shipping industries generally. However, we must play our part in ensuring that other nations comply with their obligations. We are fed up with being the one nation that plays by the rules in Europe and the world, while others cock a snook at European directives and agreements. Let us be fair, but let us also ensure that no one takes advantage of us. There is no point in our shipyards and shipping companies being exposed to the full glare of competition and market forces if they must compete in a world in which other countries subsidise their industries.
We in Plymouth are fortunate to have Devonport Management Ltd., a highly successful company with a skilled and motivated work force that has attracted work from overseas and from outside the naval industry. That company now wants a period of stability and consolidation in the shipbuilding and ship repair industry, and fair competition.
Let me raise another constituency issue. British Aerospace Systems and Equipment Ltd., also based in Plymouth and a vital supplier of the naval industry, wants competition among major contractors. As I said on 16 February in the debate on the Royal Navy, it is important to
encourage competition between British Aerospace, GEC and other major prime contractors, as the best means of ensuring value for money in naval, whole ship and systems procurements".—[Official Report, 16 February 1995; Vol. 254, c. 1190.]
I hope that the Government will ensure that that competition is guaranteed.
My final constituency point concerns the excellent service that Brittany Ferries runs from Plymouth. For many years, we have had a very successful roll on/roll off ferry industry: it is possible to enjoy a pleasant cruise to Roscoff in France and Santander in Spain. The industry


is now developing, and other routes are being considered. I have used the company's services in recent years, and I can thoroughly recommend starting any holiday from Plymouth. Interestingly, 50 per cent. of British people who go to France and stay for more than four nights spend their time there west of a line from Le Havre to Biarritz. It is entirely wrong to begin a holiday by travelling from Dover to Calais; Plymouth is definitely the right starting place.
Many ferry operators fear that the Dover to Calais service is becoming little more than a floating supermarket. People are, in effect, enjoying an hour of duty-free shopping without even leaving the ship at its destination. Local newspapers are offering promotions enabling people to board such boats for 50p.

Mrs. Jacqui Lait: Does my hon. Friend agree that it is now cheaper to buy in France than to shop on the duty-free boats?

Mr. Streeter: My hon. Friend may well be right. I have not so far availed myself of that opportunity.
My point is that the impact on other ferry companies that cannot offer such a floating supermarket service is very great. Consumers are entitled to ask why they should pay so much more to travel to France from Portsmouth or Plymouth when they can sail from Dover to Calais for 50p. The answer, of course, is that the service is heavily subsidised by the duty-free shopping.

Mr. Nicholas Brown: On a point of order, Mr. Deputy Speaker. How much more must we hear about cross-border shopping in a debate about the shipping and shipbuilding industry?

Mr. Deputy Speaker (Mr. Michael Morris): The subject is tangential to the debate, but it has some relevance to shipping in general. Nevertheless, I ask the hon. Member for Plymouth, Sutton (Mr. Streeter) to return to the main substance of the debate.

Mr. Streeter: The title of the debate on the Order Paper, Mr. Deputy Speaker, includes the words "and other maritime industries".

Mr. Deputy Speaker: I am aware of the title. I have ruled, and I hope that the hon. Gentleman will respect my ruling.

Mr. Streeter: I certainly will, Mr. Deputy Speaker—and you will be delighted to learn that I am approaching the end of my speech. [HON. MEMBERS: "Hear, Hear."] The ferry companies will be disappointed that Opposition Members do not consider them to be maritime industries; they employ a great many people. [Interruption.]

Mr. Deputy Speaker: Order. I do not think that that remark was required. If the hon. Gentleman wants to make such remarks, he should go outside.

Mr. Streeter: It is disappointing that Opposition Members remain stuck in the past. They see only the industries and businesses with which they are familiar; they forget that the world is changing all the time. My constituents who are employed by Brittany Ferries are concerned about their jobs and futures. They wanted to send me here to speak on their behalf. I am sorry that Opposition Members cannot see beyond the end of their noses.
A number of important issues need to be discussed and fair competition is at the heart of all those issues. The Government must play their part in ensuring that our shipbuilding, ship repair and other maritime industries are not prejudiced by unfair subsidies abroad, and I ask for an assurance from my hon. Friend the Minister that he is paying attention to the interests of those industries.

Mr. John Hutton: I congratulate my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) on selecting this subject. As he said, this is the first occasion for some time—certainly the first occasion in the current Parliament—on which we have engaged in a wide-ranging debate about the shipbuilding industry: I welcome that, and I know that my constituents will as well.
It is incontrovertible that, as has already been said, the shipbuilding industry has been in steep decline for more than a generation. The results of that decline have been visible, and many Labour constituencies have lived with the consequences—massive unemployment, the end of apprentice training schemes, a fear of the future and a profound sense that job security is vanishing.
We have also seen the decline of certain famous shipyards—indeed, the disappearance of two: Cammell Laird on Merseyside and Swan Hunter on Tyneside. That is very regrettable, and could have been avoided had the Government shown the commitment and support for our shipbuilding industry that other Governments in the European Union have shown. It is a lasting indictment of the Government's record that they were prepared to sit on their hands and do nothing to support those famous shipyards.
As my hon. Friend the Member for Govan hinted, the reasons for that decline are numerous—they are also complex. They have to do with hidden subsidies, both direct and indirect, which many foreign countries have provided for their shipbuilding industries. The reasons involve the lack of investment in the industry in the 1960s and 1970s.
Whatever the reasons for the decline, it is incumbent on the Government to recognise that we can do something about it, as my hon. Friend the Member for Govan said. The Government must recognise that the prospects for the industry are not all doom and gloom. Most independent analysts expect an increase in demand for new merchant shipping throughout the remaining years of the decade. It is important that the remaining industry, which is a high-tech, state-of-the-art industry, should be able to take advantage of the increase in demand when it comes. There has been significant investment in many of the principal yards in the past 10 years.
There will be increased demand for a number of reasons. The first reason is the increasing age of our merchant shipping fleet, which is nearly 17 years old in Britain, compared with 13 years old throughout the rest of the European Union. Our shipping is ancient and needs to be replaced. There will also be an increased demand because of the improving environmental standards related to the carriage of goods by sea. Another reason for an increase in demand is the requirement for double hulling. Improvements in other aspects of the carriage of goods by sea will also lead to an increase in new merchant shipping orders. There are also chances for British yards to take


advantage of increased export opportunities in the naval shipbuilding sector. All those factors should give the Government sufficient grounds to look at the industry again and review the way in which they provide practical support to shipbuilding.
One of the problems bedevilling British shipbuilding over many years has been unfair competition abroad. My hon. Friend the Member for Govan mentioned the South Korean industry, which now accounts for nearly 30 per cent. of the world market for merchant shipbuilding. Some 25 years ago, there was no South Korean shipbuilding industry, but it now accommodates about one quarter of the world demand for merchant shipbuilding.
There is no reason why the British Government should not look at a range of policies to support the British shipbuilding industry and show it the same level of support and patriotism as other countries have shown their shipbuilding industries. In particular, I hope that the Under-Secretary of State for Industry and Energy will look carefully at the capital allowance regime that applies to shipowners' purchasing decisions. It is important that we match the best fiscal policies that apply throughout the European Union; at present, we do not. As a result, British shipowners are less inclined, and have historically been less inclined, to place new orders with British yards for merchant ships. The Minister and his colleagues in the Government should consider that issue directly.
I welcome the ban in the new regime on state subsidies for shipbuilding. It is clearly important that any new fiscal regime should apply to all shipowners who want to place orders. I am not saying that there should be a hidden subsidy just for British shipowners, but I am sure that when we consider the tax rules and the fiscal regime closely, we shall find ways of providing a positive incentive for British shipowners to place new orders and work.
I congratulate my hon. Friend the Member for Govan. I know that there will be widespread interest in the British shipbuilding communities in our debate. We want the Government to give a positive message of support to the industry, to give it practical assistance and encouragement, and to take action to reverse the generation of decline that has caused unemployment and misery throughout the length and breadth of this country.

Mrs. Jacqui Lait: Like my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter), I was impressed by the remarks of the hon. Member for Glasgow, Govan (Mr. Davidson), who could have made his speech from the Conservative Benches. I was worried when the hon. Member for Barrow and Furness (Mr. Hutton) started to go down the old Labour route; he recovered himself to support the call for the Minister to ensure that there is a level playing field in the shipbuilding industry. I say that not just because I spent the first 20 years of my life on Clydeside and saw the decline in shipbuilding, but because for a long time I have wanted world trade organisations and the European Union to ensure that competition is free and fair in all industries. Interestingly, the Transport Commissioner in the European Union may be one of those urging free and fair competition on other countries in the European Union.
My constituency has a long coastline but no traditional shipbuilding or ship repairing. I was attracted to the debate because of the mention in its title of maritime industries. I hope that I shall stay in order as there are a number of what I regard as maritime industries along the coastal strip of Hastings and Rye, all of which add employment to the area. Those industries are expanding and beginning to show that the industries now associated with the sea are not just the old traditional ones of ship repairing and shipbuilding.
One company in my constituency exports 98 per cent. of its products. It produces a propulsion backpack for divers, such as we may remember seeing in the James Bond films. The diving industry is expanding and has grown tenfold in the United Kingdom in 10 years. It is a high-tech industry that operates at the frontiers of technology and it provides an opportunity for wealth and job creation for the residents of Rye.
There has also been a recovery in the boatbuilding industry. That raises the question of definitions of boats and ships. I am talking about the small, leisure boat industry, in which a worldwide recovery is taking place. Companies around our shores have fought their way through a difficult recession. New orders are emerging and companies are developing new boats using new technology and equipment. They operate at the frontiers of technology to export and develop new and attractive packages for the international yachting and sailing world. As we have more leisure time, particularly in the rich west, there is a greater demand for such boats.
I may stray slightly out of order when I mention one developing sector. I am not sure whether it is a maritime industry, but I am sure that you, Mr. Deputy Speaker, will tell me if I stray out of order. The medical world is developing the use of sea water, along with shellfish, to produce a high-tech—

Mr. Deputy Speaker: Order. I am married to a general practitioner and can say that the hon. Lady has strayed pretty wide of the subject.

Mrs. Lait: I bow to your judgment, Mr. Deputy Speaker.
The more different industries develop, the more difficult we shall find it to define a maritime industry. The opportunities for developing new products, for export, and for creating jobs and wealth may come in different guises from the historic shipbuilding and ship repairing industries, but their long-term contribution to this country could be just as effective. I hope that in future debates we can extend the definition of maritime industries so that I can tell people about sea water and shellfish.

Mr. David Chidgey: I am grateful to be called in the debate, particularly as so many hon. Members wish to contribute. Hon. Members may not realise that shipbuilding, particularly naval shipbuilding, is a large employer in my constituency, and I want to have the opportunity to press that point.
I fully endorse the remarks of the hon. Member for Glasgow, Govan (Mr. Davidson), particularly the fact that shipbuilding is often dismissed as a sunset industry, incapable of withstanding the demands of worldwide competition. There have, unquestionably, been drastic rationalisations, not least in the warship building industry


that interests my constituents. Employment in that part of the industry was running at 21,500 in 1990 and is now down to below half that figure. Now, 11,000 people work in the warship building industry in this country. The decline in shipbuilding and its impact on employment is not confined to the famous yards on the Clyde and the Tyne.
In response to the remarks of the hon. Member for Plymouth, Sutton (Mr. Streeter), I should say that as a young student apprentice working in Portsmouth dockyard I remember that 22,000 people were employed to repair and refit capital and other ships for the Royal Navy. At the same time there were burgeoning shipyards along the coast around Southampton, such as Vosper, Harland and Wolff and Thornycroft. What remains of the Portsmouth dockyard today employs a mere 2,000 people—less than one tenth of the number employed when I worked in engineering as a young man.
Harland and Wolff has long since departed from Southampton waters. Vosper and Thornycroft combined to form a highly successful firm, which has shown what can be done through flexibility, innovation and export-led marketing. United Kingdom shipbuilding can succeed in the global market if we specialise in what we are good at, and I suggest that we are good at building high-value, highly sophisticated, specialised warships.
The Vosper Thornycroft shipyards in Eastleigh have shown that British shipbuilders can take on the world and win. In the past 30 years we have exported 370 ships to more than 34 navies worldwide. That is a magnificent achievement from which our shipbuilding industry can draw strength, but how can the industry benefit from the lessons that have been learned—and learned particularly hard in my constituency? The key to the industry's success is investment in skills and modern machinery, to which the hon. Member for Govan referred in his speech and which has led to increased productivity. The productivity of shipyards in Eastleigh has increased by more than 50 per cent. in the past five years. I challenge any hon. Member to find a more successful example anywhere in the world today.
We must recognise the importance of continued product innovation and move away from the traditional aspects of shipbuilding. Shipyards in my constituency have pioneered glass-reinforced plastic warships and they are leading the design development of Trimaran warships. We must also make a commitment to the motivation of the work force. Some 50 per cent. of the workers in my constituency and in nearby areas have a direct stake in the business of the shipyards for which they work. There has been no industrial disruption in the local shipyards for the past five years. That is a very telling point.
We face increasingly fierce competition in the global market. As the hon. Member for Govan pointed out, the end of the cold war, the decline in defence budgets and the potential for so-called "home competition" from our European Union counterparts have made it much more difficult for the United Kingdom shipbuilding industry. We must now contend with about 40 major competitors worldwide in bidding for orders overseas.
I hope that the Minister will concede that it is absolutely essential that we are able to continue to supply ships to the Royal Navy. It is the vital endorsement of our products at home that enables us to sell to export markets. If the Ministry of Defence is considering inviting shipyards from our European Union counterparts to tender

for naval shipbuilding contracts or subcontracting in this country, surely it must first establish whether our shipyards have the same free access to bid for similar contracts in the home markets of our potential competitors. If they do not, competing shipyards should not have the opportunity to compete against our domestic companies.
Fierce competition throughout the world has led our main competitor countries to adopt the policy of choosing a single national champion, which they then support in pursuing export opportunities. I welcome the fact that the MOD has apparently decided to follow suit. The Government's support in global export markets can make the vital difference between success and failure, particularly if we are competing against combined teams of Ministry officials and Departments and shipyards overseas. However, if the Government are to choose a national champion, that decision should be made objectively.
I believe that I am correct in saying that only a handful of shipyards in this country—one of which is located in my constituency—have the capacity to act as prime contractors for naval ship construction. In choosing a national champion that the Government will promote and support in bidding for export opportunities, it is essential that that decision should be based on an objective assessment of a shipyard's capability, export contract record and its knowledge of the market being pursued. Above all, there must be an objective assessment of which company is most likely to succeed in its pursuit of that opportunity.
I know that other hon. Members are anxious to speak in the debate, so I shall summarise my comments. The United Kingdom shipbuilding industry should no longer be considered a sunset industry. Drastic restructuring and rationalisation has already taken place and we have seen huge productivity increases through the investment in state-of-the-art facilities, the development of modern management techniques and full worker participation in the yards.
If we are to succeed in a fiercely competitive market, however, we need the dedicated support of the Government—not just for spasmodic and infrequent major new-build contracts, but for regular refit and repair work. That work should be awarded to the yards that are best able to undertake it, and invariably they will be the firms which designed and built the warships. At the very least, the firms in my constituency should be allowed to compete openly with other firms to refit the ships that they built.
I hope that the Minister will take on board the points that I have raised. I look forward to his assurance that they will be considered because they are vital to the future success of the shipbuilding industry and to the interests of my constituents.

Mr. Piers Merchant: At the outset, I align myself with two important themes to which the hon. Member for Glasgow, Govan (Mr. Davidson) alluded in his speech. First, he said that it was essential that the Government should do all in their power to ensure that British shipbuilding yards are able to operate in a spirit of fair competition. That has been a bugbear in this industry for decades and we must fight zealously for fair


competition. Secondly, I entirely support the hon. Gentleman's remarks about the importance of maintaining a strategic warship production industry. Heaven forbid that we should ever need to fall back on it as an absolute requirement, but, if defence is to have any meaning, it is essential that we maintain the means of warship production.
I wish to contribute to the debate for three principal reasons. First, I have a constituency interest. One might not think that the leafy, landlocked constituency of Beckenham is relevant to the shipbuilding industry, but it is. When a recent order—which, sadly, we did not win—was open to tender, I was lobbied by Swan Hunter of Tyneside and by two local companies in Beckenham, both of which would have provided a considerable amount of subcontract work. That shows that shipbuilding is important not only in those areas that have traditionally relied on it, but as a core industry that generates jobs and business elsewhere in the country—perhaps in the most unlikely places.
Secondly, I worked for a company one of whose subsidiaries, Clarke Chapman, was an important part of the shipbuilding industry on the Tyne. I know the importance of the industry to those companies and their employees.
Thirdly, one might say that I have an historic interest in the industry as my former seat of Newcastle upon Tyne, Central was particularly important to the shipbuilding industry of Tyneside. I spent a good deal of time campaigning on behalf of the industry that existed then—sadly, it hardly survives today—and I have maintained my interest in it. Only last year I was presented with a very nice booklet entitled "Swans of the Tyne" which bears the inscription:
Best wishes on behalf of Swan Hunter Campaign Committee".
I looked nostalgically through the booklet and on the last page I saw a picture of the Ark Royal, which was completed in 1985, sailing down the Tyne. I visited the Ark Royal shortly before it began its sea trials. What a magnificent ship it was. It was a tribute to the productive capabilities and skills of the Tyneside shipbuilding industry—how sad it is that that has been almost entirely lost. It is a very sad story and one that I bitterly regret.
In 1926, 40 per cent. of world demand was met by the British shipbuilding industry: it is now about 1 per cent. In 1960, 44,000 jobs in Tyne and Wear were dependent on the shipbuilding industry: it is now a matter of a few thousand. The amount of merchant tonnage produced in Britain was 1.5 million in 1976. That has fallen to about 250,000 tonnes now. It is a very sad decline.
I want briefly to examine the lessons that can be drawn from that experience. The lessons are many, but they show what we must do to prevent other industries from making the same mistakes.
I do not believe that the decline of the shipbuilding industry was inevitable. It was inevitable that it should suffer from the cycles created by the economy and that the fall in demand should hit the British shipbuilding industry, but that it should have had such a cataclysmic result was avoidable. It is interesting that as the shipbuilding industry recovers, countries such as France and Spain, not Britain, are picking up orders, which says something principally about our structural decline.
I should like to allay the myth that the Government have done nothing to help as that is palpably untrue. Apart from the shipbuilding intervention fund paid by the British Government, which represents the 9 per cent. maximum allowed under the seventh directive, nothing more could be done to help that would be in line with international agreements. The £2 billion that was pumped into the industry between 1977 and 1988 shows that a great deal was done, but, sadly, even that was insufficient to sustain the industry.
The problem arose before then, in the 1960s and early 1970s, when order books were full or pretty near full and production was at a record level. Steps were not taken at that time to deal with the industry's ills. Had they been solved then, the industry would have survived.
I refer briefly to three of the problems. The first was a management failure. I would never blame one side of industry, but there was terrible management failure in the shipbuilding industry—old-fashioned management, a loss of entrepreneurial skills, innovative necrosis, undercapitalisation, organisational chaos and a contempt of the work force. All that was clear on Tyneside in those years. I referred to it at some length in a speech that I made in the House in 1984.
There was also, however, a bad failure of trade union practice. Labour Members have not always been prepared to admit that and I feel that they should. It is undoubtedly true that the number of disputes, the demarcation and inflexibility that led to late and cancelled orders and costly products that therefore failed in competitive terms could have been avoided if only those problems had been addressed. I pay tribute to the work force for addressing those problems, but it did so too late. By the time the problems were put right, the strength of the industry had sapped away. That was a shame.
Nationalisation in the 1970s did not help, as it introduced another organisational dimension and confusion to an industry that was already badly holed under the water. Just about everything that could go wrong with an industry went wrong in the 1960s and 1970s, except the skills, which are still there and are slowly being lost for all time. I deeply regret that.
The House can do nothing about the historic situation, but it can learn. I have no problem with Government intervention when it is necessary for an industry. It happens here and I am perfectly happy to see it continue, but, above all, we must have a duty to put in place measures that affect industry, competition and labour relations to prevent the tragedy that hit the shipbuilding industry from happening elsewhere.

Mr. Edward O'Hara: I congratulate my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) on introducing the debate. I take a close personal interest in it as I spent my formative years as a young lad in the docklands area of Liverpool. The lives of my family and friends were closely involved with the fate of the British merchant fleet and, of course, I represent a constituency in Merseyside, a maritime area.
I wish to relate the destiny of the shipbuilding industry to the decline of the merchant fleet. A number of points have been made in that respect and I shall not repeat them. As an island nation, there are two important strategic reasons why we need a strong merchant fleet—for the


security of our trade, most of which is carried by sea and, of course, for our defence. I include the merchant fleet in my comments on defence as the Falklands campaign could not have been mounted without the magnificent support of the merchant fleet and the Gulf war amply demonstrated the dangers of losing that capacity and becoming beholden to foreign merchant shippers. Furthermore, a strong merchant fleet supports a strong shipbuilding industry.

Mr. Eddie Loyden: Does my hon. Friend realise that only three of the 104 ships chartered for the Gulf war were British owned and that the rest were either flagged out or foreign?

Mr. O'Hara: My hon. Friend is absolutely correct. We were obliged to pay through the nose for those foreign ships.
Reference has been made to the decline in the number of ships. There were 1,305 ships of 500 gross registered tonnes in 1979; by the end of 1993 that figure was down to 258. I do not have the latest statistics, but the trend has been so steady that I doubt it has been reversed.
Reference has also been made to our declining share in the world market from nearly 7 per cent. in 1979 to less than 4 per cent. in 1992, according to the latest statistics in my personal files. We were fourth in the league table of shipping nations in 1979. By 1992 we were 31st, behind such countries as the Bahamas, Cyprus, Singapore, Malta and the Philippines, when seaborne trade was and is increasing by 4 per cent. per annum.
Reference has also been made to the age of the fleet. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) referred to the average age of ships in our merchant fleet as nearly 17 years, which is absolutely true. It was six and a half years in 1979; in other words, there has been hardly any replacement since 1979. The average age of ships registered with our major competitors—Denmark, France, Germany and Japan—is nearer 10 years.
We need an increased fleet because a maritime nation needs an increased fleet, not a declining fleet. We also need a renewed fleet. That is the connection between the destiny of the merchant fleet and that of the shipbuilding industry. Obviously, a strong merchant fleet supports a strong shipbuilding industry. As the British merchant fleet will clearly require massive replacement before the end of the century, it seems crazy that Britain is not retaining the capacity to build those ships, provide those jobs and retain and develop those skills.
It has been suggested to me in discussions with the Chamber of Shipping that it does not really matter whether we retain Britain's shipbuilding capacity. It justifies building abroad on the ground that the hull of the ship is just a small proportion of the total investment in a ship; much of the investment goes into the fitting of the ship and our fitters still fit out hulls that are built abroad. However, when one asks where the engines for such ships come from, it is more reticent.
Many ship fitting skills still exist in my constituency. I was interested recently to discover that a furniture factory had set up on Merseyside because it found a dormant pool of ship fitting skills that could be transferred to furniture making. In a dock road in Liverpool recently, I noticed that, sadly, an instrument maker to the shipping industry from the early 19th century, perhaps the late 18th century, had gone out of business.
Solutions are needed. We do not have a shipbuilding capacity to build the shipping fleet that we need now and will need even more in the future. It is a matter on which owners and trade unions are agreed. I shall mention several measures briefly in passing so that others have time to speak.
We could pay more attention to the rules of cabotage, particularly with regard to coastal shipping, as many of our near neighbours do. We could give fiscal incentives to scrap ships and build new ones. We could improve our safety standards, which would give a boost to the ship repairing industry. We could give more investment to maritime transport, which is the poor relation of transport investment in Britain.
Those points could be developed further but I confine myself in the short time available to those few suggestions about what is wrong and the direction in which solutions may be found.

Mr. Nicholas Brown: I am grateful to those Conservative Members who have praised the former shipyard workers of Tyneside, but I cannot truthfully say that I know any former shipyard workers on Tyneside who would return the compliment to a Conservative Member of Parliament.
The shipbuilding community of Tyne and Wear is no more. In 1979, the largest single shipbuilding community in Britain was on Tyne and Wear. It is a measure of the significance to our community of that once great industry that this short debate has been attended at different moments by my hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cousins), for Wallsend (Mr. Byers), for Gateshead, East (Ms Quin), for Jarrow (Mr. Dixon) and for Sunderland, South (Mr. Mullin).
The industry was the cornerstone of the economy of the communities that we are elected to represent. It used to be commonplace, I suspect, in debates such as this, to say that we are an island nation; that more than 90 per cent. of our trade is carried in ships; that the Royal Navy's international role and the role of the British merchant marine is of enormous importance; that the ability to have officers to serve on our merchant ships as well as with the Royal Navy, and the ability of British citizens to find employment as seafarers, is of huge importance to our nation. More recently, we could add that we have an important and expensive stake in offshore installations, particularly in the North sea, for the purposes of mineral extraction.
It is conventional also for Labour Members to say that, since 1979, the Government have neglected those areas. Frankly, the industry would be in better shape had the Government confined themselves to just neglecting this whole area of our national activity. The truth of the matter, particularly as it obtains to shipbuilding, is that the Government have intervened. Warship procurement decisions are intensely political. The calamity suffered by the community that I represent was entirely the consequence of political decision-making within Government, particularly decisions that have affected procurement decisions of huge strategic importance.
Time is short in the debate. When it was clear that Swan Hunter was doomed, and that every person who wanted to stay in the shipbuilding industry who gravitated to Swan Hunter because it was the last large yard open in


Tyne and Wear would be thrown out of work, the Government made certain promises to our community about economic development and alternative employment prospects.
I want to draw to the attention of the House today the fact that not one of the promises made in May 1993 by the Prime Minister from the Dispatch Box at Prime Minister's Question Time has yet been put into effect on Tyneside. If the Minister takes one message away from the community that I represent, it must be that we want the promise of alternative employment opportunities to be kept. We want some action and we desperately need it now. We needed it last year and we certainly need it now.
When Swan Hunter went into receivership it was putting £1 million a week into our economy in wages alone, with the wages of subcontractors as well. It is an enormous blow to our community that that employment base is no longer there. Only another large fabrication project on the Tyne could immediately take people off the unemployment registers in any large numbers. I say that on the very day that scrap metal merchants are in Swan Hunter cutting the yard to pieces to ensure that it can never produce such a project. Something must be done and it must be done now.

Mr. Peter Robinson: I shall follow the fine example of brevity of the hon. Member for Newcastle upon Tyne, East (Mr. Brown). I should say at the beginning that I have an interest, since I have a modest shareholding in the finest of all shipyards in the world—Harland and Wolff of Belfast.
I congratulate the hon. Member for Glasgow, Govan (Mr. Davidson) on choosing this subject for a short debate. The general principles that he outlined are principles which I can wholeheartedly endorse.
It has been a general thread running through the debate that Members on both sides of the House believe that it is incumbent upon the Government to ensure that we have what has been described as a level playing field. We do not have that at the moment.
Even those yards, particularly in South Korea, which are now putting up their hands and claiming that they are clean and that no subsidies are being given to them, clearly are receiving hidden subsidies. Those who know anything about industry in South Korea will know that it is easy to give hidden subsidies because the people who are building ships are also turning out the steel and doing everything else connected with shipbuilding, so subsidies can be given in relation to other products and materials related to shipbuilding.
This nation must recognise that it is not in a position, certainly at present, to compete in the same market as the South Koreans. The hon. Gentleman is entirely right that the future, at least the near future, for shipbuilding in the United Kingdom must be at the high technology end of the shipbuilding market.
Harland and Wolff was forced into competing in the bulk and tanker market, but it has had to try to find a niche in the high-tech end of the industry. It now has a product far in advance of anything that can be offered anywhere else in the world.
I hope that BP in the North sea and the Gulf of Mexico, where the water levels are such as to allow oil to be pumped using ships, will consider buying British in order to ensure that our industries benefit from the oil in the North sea in particular.

Mr. Mike Watson: The hon. Gentleman spoke of the importance of seeking orders in the industry in other directions, linking up with oil, and so forth. One matter which has not been given much airing in the debate is the need, at a time of contraction in the number of military warships and military spending, for defence diversification and perhaps the establishment of a defence diversification agency. That is the policy of my party. What is the hon. Gentleman's view on that policy? Is not that an important way to ensure that skills which cannot be retained in the shipbuilding industry can none the less be used in the future because, as has been said, they include skills at the cutting edge of technology?

Mr. Robinson: I am happy to concur with the hon. Gentleman. For instance, the American navy is in our waters frequently, yet it does not come to our shipyards to have repairs done. There is a great deal of work that the Government could do to encourage further use of our shipyards.
Leaving the embarrassment of the Conservatives to one side, many people recognise that there is likely to be a Labour Government, probably fairly shortly. I notice the horror on the Minister's face. I shall pay special attention to the winding-up speech by the hon. Member for Cunninghame, North (Mr. Wilson)—I say that, not by way of a challenge, but by way of interest—to determine the attitude that the Labour party will have to the shipbuilding industry in the United Kingdom as a whole and, from my point of view especially, in Northern Ireland.

Dr. Norman A. Godman: I must be brief, as you know, Mr. Deputy Speaker.
The hon. Member for Beckenham (Mr. Merchant) took us down memory lane. I think I am right in saying that, along with my hon. Friend the Member for Jarrow (Mr. Dixon), I am one of two former shipyard workers in this place. We both served our time as shipwrights.
I make a plea to the Minister. As I said to him the other evening, it is essential for the many hundreds of my constituents who work at Ferguson in Port Glasgow, at Kvaerner in Govan and at Yarrow of Scotstoun that the shipbuilding intervention fund be continued beyond 31 December 1995—European Union wide.
The Greenpeace occupation of Brent Spar prompts a question. Many of those redundant shipyard workers in Scotland might be re-employed, were the Government to adopt a more radical implementation of part I of the Petroleum Act 1987. If the Brent Spar were brought ashore to be dismantled and its materials recycled, it would provide plenty of work.
Shell Expo gave the game away. It said, in a recent publicity leaflet, that 52,000 man hours would be needed to take that redundant oil storage installation and sink it in deep water whereas, if it were brought ashore, as it should be, about 360,000 man hours would be involved in the process. The Government should be doing the latter.


They have failed the fishing interests and many others in their failure to implement part I of the Petroleum Act 1987 in a more radical way.

Mr. Brian Wilson: We have had a good debate and, like everyone else, I am grateful to my hon. Friend the Member for Glasgow, Govan (Mr. Davidson) for making it possible. It has highlighted the fact that we should debate maritime issues more often and at more length, because there is obviously a great deal of interest and anxiety about them.
Conservative Members made some rather odd contributions about shellfish, sea water and duty frees, and we heard from the hon. Member for Beckenham (Mr. Merchant) a speech that he gave in 1984, which he apparently thought worth recycling 11 years later.

Mr. Merchant: indicated dissent.

Mr. Wilson: There has been little sign of understanding from Conservative Members that we are discussing a great national industry, which has been allowed to decline grievously as a result of criminal neglect and downright hostility. It is all very well prattling, as the hon. Member for Plymouth, Sutton (Mr. Streeter) did, about island races and maritime traditions, but those words are meaningless if they are not matched by actions.
For years, we have witnessed the relentless decline, not only of shipbuilding but—incomprehensibly—of the British Merchant Navy. As my hon. Friend the Member for Knowsley South (Mr. O'Hara) said, the issues are linked. We need a British-owned, British-registered, British-crewed Merchant Navy; that is the basis of the potential of the shipbuilding industry.
Everyone knows that there will be many merchant shipbuilding orders in the next few years; the question is whether they will be placed by British owners in British yards and whether there will be enough left of the infrastructure to allow that to happen.
The hon. Member for Beckenham spoke about learning lessons, but the lessons have not been learnt. In the same way that the British capacity to build ships was thoughtlessly, mindlessly run down, the British capacity to build trains is being thoughtlessly, mindlessly run down. In a few years' time, since there will be no York and no Derby, we shall buy trains as well as ships from Korea, Spain and America, because idiots have decided that that industry is not worth saving or helping through a difficult time.
I want to ask a few questions, in the few minutes available to me, for the Minister to answer directly. I want to ask him especially about VSEL, and I should like to know why the delay continues in publishing the Monopolies and Mergers Commission report. That report has important implications, not only for Barrow, but for Yarrow on the Clyde and the entire British naval shipbuilding capacity. If, as is widely predicted, both bids are cleared, the conditions that attach to them may be crucial. I put down that marker today.
Why is there a delay? Why has the report now been with the Department of Trade and Industry for longer than the obligatory 20 days? When may we see that report and obtain some movement on that important issue?
I shall speak briefly about Yarrow, and especially about the delegation that is in South Africa at present. On behalf of all Opposition Members, and I hope Conservative Members, I extend the best wishes of the House to Mr. Murray Easton, Mr. Gavin Laird and the Lord Provost of Glasgow, Tom Dingwall. It would be fitting indeed if Glasgow and the Clyde, with our long and proud record of solidarity with the democratic movement in South Africa, were now at the forefront of re-establishing Britain's trading links with the new South Africa. I seek an assurance from the Minister that the Government are doing everything possible to support the Yarrow bid and to ensure that that order comes to this country, and especially to the Clyde.
I shall briefly discuss a subject that was mentioned by the hon. Member for Belfast, East (Mr. Robinson). I have with me an interesting publication, commissioned by the DTI, about floating production systems. It is a report from the Oil and Gas Projects and Supplies Office. That is a subject of immense importance, not only to shipbuilding but to all the spin-off industries of shipbuilding. It would be worthy of a debate in itself.
I should be interested if the Minister would confirm that there is the prospect, in the next few years, of 30 large hulls being ordered for use in British waters, in the oilfields to the west of Shetland. That offers massive new potential for shipbuilding and marine technology in this country. We want to know today—I shall give assurances from the Opposition—the extent to which the Government will get behind the British shipbuilding industry to ensure that those orders go to British yards, and that the subcontracting goes to British companies. If not, it is distinctly possible that all, or the great majority, of those vessels will be built in Norway, Spain or in any other part of the world.
I visited the shipyard at Harland and Wolff, in the constituency of the hon. Member for Belfast, East. The future of Harland and Wolff and the large-scale employment that exists there is tied up with what is contained in that report about floating production systems. Equally, as the report recognises and as is realised in that part of the country, the prospect of a substantial shipbuilding revival at Swan Hunter is tied up with this new generation of vessels which will be ordered in the next few years.
The report is valuable and sets out the potential and the difficulties. It says that there is a lack of interest or awareness in investment circles in this country in getting behind the creation of an industry in Britain building those vessels for west of Shetland. I have the report and I am glad that it has been commissioned, but, above all, what I want from the Minister, and he can write to me on this, are the detailed responses to the report's recommendations and observations. That is vital for Harland and Wolff and for the old Swan Hunter yard. There is potential in the Clyde. Right through the maritime industries, this is an exciting, large-scale opportunity to talk, not about the past, but about the future.
Those structures will be built somewhere. Will they be built in United Kingdom yards or in overseas yards for use in British waters? I should like, although not today because there is no time for it, a detailed response from the Minister, on which we can base an urgent debate.
Only a few weeks ago, we saw the embarrassing spectacle of the Oriana arriving from a German yard to be named by the Queen in Britain. No matter how it is


dressed up, it is not a British ship because it was not built in a British yard. It is to the Government's shame that it is no longer possible for such a ship to be built in a British yard when British craftsmen are available to do it and when tens of thousands of people are unemployed in every shipbuilding community.
To some extent, the saving grace was the fact that some 80 per cent. of the equipment on board that ship was made in Britain. I commend the efforts of the maritime supply industries to maintain their export effort and thereby the ability to fit out ships such as the Oriana. They have told me and, no doubt, the Government that they cannot rely indefinitely on the export market for their continuing good health. We need a British Merchant Navy. We need British merchant ships that are built in British yards by British craftsmen and crewed by British seaman. That is a maritime policy worthy of the name for an island nation.
I therefore say to Conservative Members: do not give us any flannel about island races or appeals to sentimental considerations because, unless there is a Merchant Navy and a merchant shipbuilding industry, we betray that proud heritage. The Conservative party likes to wrap itself in the flag, but I cannot comprehend what the Government have done to the red ensign. Let them start to reverse that; let them get seriously behind shipbuilding; let them recognise the urgency and address themselves in particular to the new opportunities that exist in the industry.

The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Richard Page): I add my congratulations to the hon. Member for Glasgow, Govan (Mr. Davidson) on securing the debate. In the 20 years that I have been in the House, I came only third in all the ballots in which I took part, and then I was not reached and called; but enough of that, otherwise I shall be accused of being a rugby selector.
I appreciate the importance of the subject raised by the hon. Member for Govan. He is right to say that we have not had such a debate for some time. I am grateful for the opportunity to respond. I wish I had more time, but a number of hon. Members have made comments. It will not be possible to respond to all of them, but I shall try to respond to one or two questions that have been asked.
As the Opposition spokesman, the hon. Member for Cunninghame, North (Mr. Wilson) suggested, I shall write to him about some of his points. He was a little disingenuous, if I may use that word, in his comments about the Oriana. As he knows, it was not quoted for by any British yard, which is a pity. It was made in Germany. He put the record straight, however, by saying how much British equipment was put into that great ship.
The hon. Gentleman mentioned floating production systems and what can be done in that regard. We are obviously encouraging the whole industry to supply such equipment. We are heartened by Harland and Wolff's interest in the subject. Obviously, we hope that some of those orders will be made and constructed in UK yards.
Before I turn to some of the points made by the hon. Member for Govan, and it is his debate, despite all the other comments made by other hon. Members, it would be helpful if we considered the world and European

perspective. Some comments seemed to push it to one side, as if the real market did not matter. Much of what I shall say will be in agreement with the hon. Gentleman's comments.
As the House and people outside know, as a result of low ordering in recent years, on a global basis there is a significant surplus of world capacity for larger ships. As ships get older, they will be need to be replaced, but the expected upturn has not yet occurred and its timing is highly unpredictable. As one or two hon. Members have mentioned, Korean capacity in particular has been substantially expanding, creating more uncertainty for all manufacturers of such vessels.
In 1975, available capacity worldwide was estimated at some 22.4 million compensated gross tonnes. That had dropped to some 15 million by 1990 and is forecast to increase to about 21 million by 2000. The years 1975 and 2000 are roughly comparable in terms of total capacity, but during that period great changes took place in the share accounted for by individual nations. In the past 20 years, western European, Scandinavian and Japanese yards have taken considerable steps, at no little pain, as everyone in the country recognises, to reduce their shipbuilding capacity. They have sought to restore a healthy market and to reduce the possibility of a repetition of the slump in shipbuilding.
In 1975, western Europe and Japan accounted for approximately 80 per cent. of world merchant shipbuilding capacity and Korea accounted for less than 2 per cent. That is interesting, but it is a fast-moving scene. Some sources in the Korean shipbuilding industry reckon that they have just 10 years of dominance before China takes over and supplants them in turn. Over-capacity is having a dramatic effect on prices. Cash prices are significantly lower than they were five years ago. For example, a 150,000-tonne tanker can be bought today for just $40 million compared with $55 million in 1992.
On western Europe, I am glad to say that some aspects of the UK shipbuilding industry are looking a little healthier. Medium-sized yards are specialising in vehicles such as ferries and tugs, and we are achieving some significant advances.
On the Organisation for Economic Co-operation and Development agreement, I must disappoint the hon. Member for Govan. I do not think it would be advantageous to continue. The European Commission has already carried out investigations. We all know that there have been significant market distortions. By removal of all those subsidies, we will find ourselves in a much fairer market. I shall not go into the hon. Gentleman's mixed metaphors, with his comments on swimming and climbing uphill.
An OECD agreement was signed in December 1994 by representatives of the European Union, the United States of America, Japan, Korea and Norway, which account for some 70 per cent. of world capacity. That enables some control to be kept on the effect of unfair subsidies and unfair competition. The OECD agreement has power to investigate allegations of misconduct and to impose penalties. The agreement is a good one for the UK. Korea has accepted a strong anti-dumping code; Japan will modify its home credit scheme; the United States has made concessions to the applicability of the Jones Act; and the EU is giving up its direct subsidy. I hope,


therefore, that we shall have a level playing field. I assure the House that the Government will have no hesitation in chasing up any areas where unfair competition exists.
I should like to turn to some success stories. We build ships, although not as many as I should like. The UK has a substantial repair industry, with a turnover of more than £250 million. It employs up to 7,000 people at peak times and they are located all around the coast. Hon. Members have remembered the contribution of those companies serving their localities—a valuable contribution to the UK economy.
Let us not forget the marine equipment industry, which was mentioned by my hon. Friend the Member for Beckenham (Mr. Merchant) and by the hon. Member for Knowsley, South (Mr. O'Hara). There is UK-made marine radar, paint, propellers, engines, and equipment to service the whole range of maritime activities. Sixty to 70 per cent. of a ship's value is in its equipment. Obviously, we want to ensure that we can expand that industry.
We can do more. Marine equipment companies have not been helped by a reduction in home production, but it would be a mistake to assume that they are no longer a world force. The industry has a substantial order book worth about £2 billion. It retains substantial engineering and design expertise and over 70 per cent. of its output is exported to yards abroad. I hope that in July I shall be leading a delegation of business men from the British marine equipment industry to Japan to continue the dialogue and maintain the momentum of our export initiatives.
I thank the hon. Member for Govan for initiating this debate. It has been valuable and I hope that next time I will have a little bit longer to give a more comprehensive response to his important questions.

Department of Transport (Property Purchase)

1 pm

Sir Terence Higgins: I am glad to have this opportunity to raise the issue of the Department of Transport's discretionary purchase of property blighted by proposed road developments. My interest in this, as I shall explain, arises from my constituency experience, but I believe that it is a matter of very much wider importance than that affecting just my constituents.
In my view, the way in which we obtain our transport infrastructure can be described as nothing less than highway robbery at the expense of those who happen to have the misfortune to be near a proposed road development. The reality is that such people are seriously affected and, if the proposals for discretionary purchase were properly implemented, the cost might run into not tens of millions of pounds but hundreds of millions of pounds; therefore, I understand that my hon. Friend the Minister of State may be under some inhibitions from the Treasury when he replies to the debate. I should stress that that would be the gross cost. If initially the discretionary purchase of the properties took place—as I believe that it should—once the road was built it would be possible for the Department to re-sell them to new owners and recoup part of the cost.
Let me stress that I am not concerned with compulsory purchase, which is a far from perfect system and has problems associated with it. I am concerned essentially with discretionary purchase. As my hon. Friend the Minister will know, because I have raised this matter in previous Adjournment debates, it arises from experience in my constituency of Worthing where there is a proposal to develop the A27. For many years, I have maintained that the A27 should have a real bypass, completely avoiding the town of Worthing. The Government's so-called preferred route cuts the town in two and involves the demolition of a number of properties. The scheme's effect on many other properties is considerable.
My hon. Friend the Minister will know that there has been a public inquiry into this matter, and I remain strongly of the view that there should be a real bypass. We are awaiting the inspector's report after the inquiry, which lasted a year or so, and I hope that, in the light of it, we will have a satisfactory decision from my hon. Friend.
The question of discretionary purchase has some impact on the choice of route and the cost of alternative routes. I shall come to that in my concluding remarks.
Over a long time I have pursued with Ministers individual cases of properties affected by the Government's preferred route. I am concerned that such cases should be decided by ministerial discretion and I have received replies from Ministers about many cases. However, some months ago, I discovered that the Highways Agency was proposing to reply instead of a Minister, which was highly objectionable. These issues are not merely ones of finance: whether a property should be purchased may depend on the occupant's need to obtain money at short notice, perhaps to repay debts, or on his need to move to a different place to get a job, or his health might be affected by the construction work or by pollution from the road once it is built.
Decisions ought to be matters for ministerial discretion rather than for official discretion. I am glad that the present Secretary of State has now accepted that, although I understand that he has given the responsibility for dealing with these discretionary matters to the Under-Secretary, my hon. Friend the Member for Epping Forest (Mr. Norris). I am glad that my hon. Friend the Minister for Railways and Roads is to reply today, since he has overall responsibility for the development of the roads programme.
The essential matter that we must consider is the improvement, as it seemed at the time, that was brought about by section 62(2) of the Planning and Compensation Act 1991. It states that the highway authority
may acquire by agreement land the enjoyment of which will in their opinion be seriously affected by the carrying out of the works or the use of the highway".
Many of the problems we face and the reasons why some of the deserving cases have been turned down stem from the Government's interpretation of that expression in the Act. The interpretation has been extremely restrictive. The Government have said that they will generally consider only those cases where property is within 100 m of the centre line of the proposed road. That proposed road may be six lanes wide. Considering only properties within 100 m of the centre line disregards the impact on those further away.
The legislation refers to whether the development will have serious effect. The Department has interpreted that by asking whether the impact on those in the house will be intolerable. Clearly, "intolerable" is a much tighter criterion than "serious". It is a tougher standard to meet. Instead of abiding by the wording of legislation as it has been approved by the House, the Department has sought to reduce its impact.
I want to refer to a report by the ombudsman, which is typical of a number that I have received on other constituency cases, about the way in which the Department has arrived at the guidelines used to decide whether a property should be purchased. I shall quote from the report and give the flavour of it because I have rarely seen such a damning report. It revealed the internal workings of the Department with regard to the way in which the guidelines were interpreted. I want also to deal with the court case that was decided in June 1994. It also has significant relevance to this issue.
The ombudsman's report said:
Guidance on the operation of the discretionary scheme was published on 17 January 1992. It seems to have been internally contradictory. On the one hand it said that for property within 100 m of the centre line of the proposed road the presumption should be that it would be seriously affected … On the other hand it also said that property within the 100 m zone would be treated as outside the scope
of the legislation
if the reasonable expectation was that the levels of traffic noise or construction noise would not be such as to qualify for noise insulation.
The ombudsman found that the discretionary criteria were inconsistent and contradictory.
The report also said that there was an inconsistency between what was published in the highways manual and what was published in the Department's press notice. It said that if constituents sought to fill in form G1, which

is relevant to discretionary purchase, it was wrong if the notes given to them made no reference to the criteria by which a serious effect would be judged.
It was pointed out also in the report that the agreement to purchase would be approved by the headquarters of the Department of Transport but that a decision to reject would be taken only by the regional office; in other words, the rejection cases were not normally going to head office, let alone to Ministers.
It was pointed out that some of the questions that the Department asked constituents to answer were so confusing that even an official who sought to amend matters got things the wrong way round. One of the questions involved a double negative. The ombudsman pointed out that that was not a helpful way of putting questions to applicants. The whole history of the matter shows that the way in which the guidelines were determined can be described only as a shambles. As a result, a number of bad decisions have been made.
Some strange excuses were produced, too. For example, the ombudsman pointed out that the crucial press notice was not withdrawn for five months after its content was found to be seriously flawed. He was told that there were legal reasons why he could not be given a proper explanation, but when he asked to see the legal advice, it turned out not to exist. For all these reasons, I believe that the criteria that have been used are not adequate and that the guidelines clearly need serious revision.
However, the main point concerns a case that has been decided in the courts.

Mr. Michael Lord: I am grateful to my right hon. Friend for giving way in this short debate. I shall be brief.
I am dealing with what is probably the worst case that I have ever had as a constituency problem and it involves exactly the point that my right hon. Friend is raising. A man's life has been completely ruined by blight.
As a member of the Parliamentary Commissioner for Administration Select Committee, which looks after the ombudsman, I have looked into the question of redress and compensation even in cases where the letter of the law has been strictly observed.
I point out to my right hon. Friend that both my hon. Friend the Minister of State, Treasury and Sir Patrick Brown, the permanent secretary at the Department of Transport, have made it clear that, even where everything has been done correctly, maladministration can still be shown.
In Committee, I quoted the Minister of State, Treasury as telling a previous meeting of the Committee
that failure to mitigate the effects of strict adherence to the letter of the law where this produces manifestly inequitable treatment, that will now be an example of maladministration.
I asked Sir Patrick Brown:
Will you now confirm that?
He responded:
Yes, Mr. Nelson was speaking for the Government.

Sir Terence Higgins: I understand my hon. Friend's point and I am glad that the Select Committee has looked into that subject. The crux of the matter is that the Department of Transport established certain guidelines, the first of which states:
The Department will use its discretion to purchase … where it judges it would be intolerable for the occupier to remain in the property during works or once the road is open.
The guidelines go on to list a number of other factors that need to be taken into account, but the fact is that the form to be filled in within the Department is much more restrictive. It asks:
Does the property lie within 100 m of the proposed centre line?
As I said, I do not believe that that has anything to do with the legislation; it is a purely arbitrary decision by the Department. The form also asks:
Was the road scheme known at time of purchase of the property?
The next question is:
In the Department's view (based mainly on forecast noise levels), will the enjoyment of the property be seriously/intolerably affected?".
If the answer is no, the other criteria are not examined.
In fact, the crucial criterion, which the courts took into account, is what has happened to the value of the property. Clearly, enjoyment of the property is seriously affected if one finds that, as a result of the road scheme—whether the property is 100 m or half a mile away—one cannot sell it at the price that applied before the scheme was introduced. I am happy to say that the courts are also of that view.
In the case of R. v. Secretary of State for Transport ex parte Owen and another, the court criticised the Department in a number of respects. The judgment states:
It seems to me that the question of the effect, serious or otherwise, of the diminution of value was never fully or properly addressed.
A subsidiary judgment states:
whatever view one takes of the guidelines issued by the Department …, and at best they have been characterised as ineptly drawn, they seem to me at least to support one view, which in any event I for my part would readily have arrived at, namely, that any significant depreciation of property consequent upon a road scheme indicates of itself that, looking at the matter prospectively, the scheme has a serious effect on the enjoyment of the land.
In other words, the court decided clearly that, if the value of a property has fallen as a result of a scheme, discretion should be exercised. My hon. Friend the Minister knows that I have a large number of such cases in my constituency.
I understand that the financial implications of accepting this even in my constituency are substantial and are likely to be massive across the country as a whole, although, as I said, one must take into account the eventual net cost rather than the gross cost. There will be resistance from the Treasury, but the cost is merely a reflection of the extent to which individuals living on the line of route are suffering.
I believe, therefore, that the Department should change the guidelines—I understand that they are under review—and must take into account the effects of a scheme on the value of a property. It has nothing to do with whether the property is 100 m from the centre line of the road and nothing to do with the noise or whether it will be intolerable; it has everything to do with whether the value of the property has declined. I hope that my hon. Friend

the Minister will be able to accept my view, even recognising the financial consequences. The cost should rightly fall on the public purse; the effect of the Government's decisions should not fall on the unfortunate individuals who just happen to live near the line of route.
I know that time is short, so I shall deal now with another crucial point. The Department has already purchased a number of properties, which is welcome, but the way in which it has handled the affair is far from satisfactory. Even in a small close in my constituency—one with perhaps a dozen houses—it is possible to find that eight have been purchased while four have not. The tenants whom the Department has put in the purchased houses have, in many cases, been highly unsatisfactory. Some have criminal records and have to be evicted, so the area has been run down. I fear that that will continue for a long time.
If it is accepted that discretionary purchases should be made because of the reduction in the value of a property and the other criteria that I have mentioned, there will clearly be important social and economic effects. In fact, the choice of route will depend on how much the Treasury has to pay to purchase the relevant properties.
The public inquiry to which I referred has been examining the arguments for more than a year. I should stress that the bypass route will be largely in tunnels, to avoid possible adverse effects on the downs. The result of the investigation shows that, in purely financial terms, the arguments may seem fairly finely balanced. None the less, I believe that the case for the bypass remains overwhelming. However, if one takes into account the true effect on constituents, or if one were to quantify the cost to the Department of purchasing the properties affected by the road construction and the road itself once it is built, the balance goes very much against the preferred scheme advocated by the Government in favour of the real bypass route.
I hope that a rapid decision will be made in favour of a bypass. Perhaps my hon. Friend the Minister can tell me when he expects the inspector's report to be received and when he expects to make a decision. I hope that it will not be very difficult for him to accept my contention in the light of the court case that the depreciation in value must be taken into account in deciding whether there has been a serious effect on a property, and to accept that the case for the bypass, which would involve the destruction not of vast amounts of property but of only four houses, is now absolutely overwhelming.

The Minister for Railways and Roads (Mr. John Watts): I am grateful to my right hon. Friend the Member for Worthing (Sir T. Higgins) for providing an opportunity to debate such matters, which are of grave importance to his constituents and of great interest to a number of right hon. and hon. Members. I recognise the concern felt and the genuine hardship experienced by those who are affected by proposals to carry out public works in their vicinity.
My right hon. Friend has referred to the statutory provisions for compulsory purchase and to the fact that property owned by some people does not have to be needed for a scheme to be seriously affected by it. It was precisely to deal with such cases that the House extended, by way of the Planning and Compensation Act 1991, the


discretionary purchase powers, which used to be more limited. Now public bodies and highway authorities may, in advance of a scheme, use their discretion to buy property if the enjoyment of it will, in their opinion, be seriously affected by the scheme.
Since February 1992, the Department of Transport and latterly the Highways Agency have used those powers where they have considered that motorway and trunk road proposals seriously affect nearby properties. The Highways Agency operates the scheme in accordance with guidelines which were first approved by Ministers. It is intended to ensure fairness, consistency and rationality of treatment across the country. As my right hon. Friend knows, my hon. Friend the Minister for Transport in London, who also has responsibilities for local transport and road safety, oversees the operation of the scheme. As my right hon. Friend said, my hon. Friend undertook that responsibility following my right hon. Friend's very powerful representations that there should be ministerial involvement in the final determinations made on applications under the scheme.
My right hon. Friend raised a particular case which was the subject of an investigation by the Parliamentary Commissioner for Administration. I must acknowledge that the Highways Agency was at fault, first, in not processing the application quickly enough, and, secondly, in failing to pay proper heed to the medical condition of the applicant. I am pleased to inform the House that all those matters have since been remedied and the agency has now agreed to purchase the property. Clearly, my right hon. Friend's constituent is owed an apology for the way in which the case was handled and I gladly give that apology today.
Inevitably, some applications under the discretionary scheme have had to be rejected; but I can inform the House that offers to purchase have been made in more than 70 per cent. of the qualifying cases where there has been judged to be a serious effect under the present guidelines.
On the cases associated with the A27 improvement scheme raised by my right hon. Friend, the Department of Transport and the Highways Agency between them have considered 174 fully completed applications for discretionary purchase from my right hon. Friend's constituents. Of those applications, offers to purchase have been made in respect of 118 properties and 47 have been rejected. The balance of nine is accounted for by applications that have not yet been decided.

Sir Terence Higgins: Is it the case that, in considering those applications, the Department has not taken into account the question of the depreciation of value in the property, even though the courts have decided that it ought to do so? Unless my hon. Friend amends the guidelines to cover that point, all that will happen, given the court decision, is that all my constituents will have to bring individual cases, saying that the courts have decided that the Department must purchase.

Mr. Watts: I shall come shortly to the implications of the judgment in the Owen case, to which my right hon. Friend referred. I have reminded the House that discretionary powers are exercisable only where the enjoyment of the property will be seriously affected. Up until the applications brought by Lieutenant-Colonel

Owen in the Court of Appeal last year, it was generally considered that enjoyment of land and property could be seriously affected only by physical factors, such as noise, dust, and vibration. The current guidelines were based on that premise. The House will know that, in coming to their decision on the Owen case, the Court of Appeal judges concluded that, in addition to physical factors, diminution in value should also be considered when assessing serious effect.
I confirm that the Highways Agency has complied with the Court of Appeal judgment and redetermined Colonel Owen's application. Following that judgment, the Highways Agency undertook to review and revise the discretionary purchase guidelines, taking into account the Court of Appeal judgment relating to diminution in value. That review has taken longer than I would have wished, but I hope that the House will understand our concern to get it right and to have guidelines that can be applied even-handedly to both road and rail proposals. We are in the final stages of considering new guidelines and I hope that an announcement will be made shortly.
The decision-making process in respect of discretionary purchase has two stages. First, we must determine whether serious effect arises. To comply with the Owen judgment, we will in future take account of physical factors and diminution of value in making that initial judgment. The second stage is to determine whether to exercise discretion where an application satisfies the serious effect test. I am not in a position today to say anything more about how that second stage in the decision-making process will be determined, but I hope to do so shortly.
During the period since the Court of Appeal judgment, the Highways Agency has continued to operate the pre-judgment guidelines and to buy property where there has been serious effect from physical factors and severe hardship has arisen from an inability to sell homes at a reasonable price. I reaffirm the advice that I gave to the House on 28 April 1995 that all applications made since the judgment, which have been considered and rejected under the present guidelines, will be reconsidered under the new guidelines when they are published, which, as I have already said, I hope will be very soon. Consideration is also being given to the treatment of applications made and decided before the Owen judgment, and I hope to be able to make an announcement on that aspect, too, in the near future.
My right hon. Friend has rightly drawn attention to the proposal to improve the A27 trunk road between Worthing and Lancing. As he knows all too well, that is a heavily congested stretch of road linking a number of major towns along the south coast and it is the only east-west trunk road in the south-east, south of the M25. Investigations to determine the route began in 1972, but it was not until 1993, after public consultation on four options, that the scheme reached the public inquiry stage, which opened on 28 September 1993 and ended on 24 August 1994.
I understand that the inspector is making good progress and we expect to receive his report early in the new year. It would be inappropriate for me to try to anticipate its contents, but I am sure that my right hon. Friends the


Secretaries of State for Transport and for the Environment will give the findings careful consideration before coming to their decision.

Sir Terence Higgins: Is my hon. Friend seriously saying that the inspector will take 18 months to report?

Mr. Watts: I am afraid that there is a correlation between the length of the public inquiry and the time that it normally takes for an inspector to consider the evidence presented to him and to reach his conclusions and report on them to my right hon. Friends.

Mr. Lord: A few moments ago, I referred to an horrendous case in my constituency. The gentlemen's house was not devalued; it was rendered absolutely unsaleable, which removed his collateral for his business. His house is completely ruined and he is in a desperate state. As my right hon. Friend says, time is of the essence. While we sit talking about it and inspectors are pottering around, such people are waiting for important news to drop through their letter boxes. Please may we have some real urgency?

Mr. Watts: Certainly no one would be more pleased than me if the production of inspectors' reports were speeded up so that we could make firm decisions.
My right hon. Friend also suggested that the economic evaluation of the scheme may change as a result of the operation of new guidelines on discretionary purchase. I can assure him that such matters will be reviewed when my right hon. Friends the Secretaries of State for Transport and for the Environment make their decision following receipt of the inspector's report. I assure my right hon. Friend that we shall proceed as rapidly as possible in publishing the guidelines and we shall take full account of the points that he has made in this debate.

Gibraltar

Mr. Andrew Mackinlay: I regret that the Minister is not yet in his place. The genesis of my interest in Gibraltar to a large extent goes back to an invitation that I received, along with a number of other parliamentarians including my hon. Friend the Member for Bolton, South-East (Mr. Young), to its national day in the autumn. I was profoundly moved by the national identity of the Gibaltarian people and the fact that they wish to continue their association with the United Kingdom.
The style and temper of my remarks may not be shared by all hon. Members, but I know that many will agree with the message that I want to convey to the Minister, because they share my outrage at the conduct of Spain in harassing and frustrating people on the Gibraltarian-Spanish border.
Many hon. Members will share my dismay at the apparent indifference and weakness of the Foreign Office, and to some extent of the Prime Minister, when it comes to promoting the interests of the Gibraltarian people in their various councils and deliberations both bilaterally with Spain and in the European Union.
The most recent event that I want to raise is the use by Spain of the so-called Schengen agreement as an excuse further to frustrate people travelling to and from Gibraltar by imposing renewed and inordinate border controls from 27 March. Incidentally, it must be said that the Gibraltarian Government drew the attention of the Foreign Office to the ramifications of the agreement, even when it was in draft form, as early as September 1991, so I would have expected and hoped that the interests of Gibraltar would, or should, have been taken into account subsequently when such matters were being discussed in the European Union.
Until now, I have referred only to the Gibraltarian people, but the wrongdoing by Spain is not confined to them. It is as relevant to people from Grantham or Grampian, and to people in Huntingdon or Sedgefield. British people who spend their holidays in Spain or reside there want free access to and from Gibraltar yet they and the Gibraltarian people are being frustrated.
What on earth is the Foreign Office doing? What on earth is it for? There cannot be any country in the world that would have tolerated its nationals being stitched up for so many weeks without there being one hell of a row both in the press and in Parliament, and without the Foreign Office demonstrating that such action by another state is intolerable.

Mr. David Young: Is not the policy of the present Spanish Government a continuation of the closed-gate policy followed by the former fascist Government of Spain in order to bring Gibraltar into submission? Does my hon. Friend agree that Spain's policy towards Gibraltar is virtually the same as the Argentine policy towards the Falklands, the only difference being that the Falklanders have been able to rely on the support of the British Government, whereas the Gibraltarians have not?

Mr. Mackinlay: My hon. Friend makes a number of points with which I agree and which need to be emphasised. What sort of foreign policy is it that leads to


our being seen to be weak and craven when our nationals are being stitched up? That sends all the wrong signals around the world, and certainly does not reassure people engaged in delicate negotiations for accommodation and agreement in Northern Ireland. It also sends the wrong signals across the Atlantic, both to the Argentine Government and to the Council of the Falkland Islands. Weakness over Gibraltar has ramifications that affect our foreign policy generally.

Mr. John Marshall: Will the hon. Gentleman give way?

Mr. Mackinlay: I shall be delighted to give way to the hon. Member for the Northern line, but then I must move on.

Mr. Marshall: The hon. Gentleman will realise that he has much support on both sides of the House, but as Spain and Gibraltar both have socialist Governments has the matter ever been raised in the Socialist International, and if so with what effect?

Mr. Mackinlay: Again, that is a good point, although probably not the most relevant. I believe that all channels should be used. I, as the Member of Parliament for Thurrock, am using the constitutional channel available to me by raising the matter on the Floor of the House of Commons. This is the Parliament of the people of Gibraltar too, although they have their own legislature. There is a democratic deficit because they are not represented either here or in the European Union, so it is up to people such as the hon. Member for Romsey and Waterside (Mr. Colvin) and me to raise the matter here.

Mr. Michael Colvin: rose—

Mr. Mackinlay: I shall give way, but this must be the last time.

Mr. Colvin: Yes, Gibraltar is part of the European Union; that is an important point to reiterate. As for the debate about Schengen and the external frontier, Spain cannot regard the border crossing between Spain and Gibraltar as part of the external frontier of the European Union, because Gibraltar is within the EU.

Mr. Mackinlay: That is absolutely right. It must be made clear that under the European treaties the Gibraltarian people and people from the United Kingdom living or travelling in Spain have rights of free mobility. The Foreign Office should jealously guard those rights, yet there is no evidence that it is doing so. That is the great charge that must be levelled against the Foreign Office today.
I am also disappointed in Her Majesty's Government because rather than meeting problems head on, they use innuendo to detract from the Gibraltarian Government's stewardship of the colony. This morning, the Select Committee on Foreign Affairs was shown a memorandum—I understand that it has not been made public, but it was made available to members of the Committee. The right hon. Member for Westmorland and Lonsdale (Mr. Jopling) referred to that document as
a scathing attack on the Gibraltarian Government.
As a matter of justice, its contents should be made publicly available so that the Gibraltar Government can respond and give their own version.
The whole affair illustrates the way in which the Foreign Office says one thing one day to one set of people but a different thing on a different day to another. Of course there are numerous problems with the governance and the economy of Gibraltar. Obviously, the economy is in a delicate state as a result of our accelerated withdrawal from the naval base. Two thirds of the economy was directly dependent on the base. Consequently, we have a moral and economic obligation to buttress that Government and that economy. The Foreign Office is not helping that cause; it is not recognising its duty to protect and promote the interests of British subjects who wish to move in and out of Gibraltar.
On 20 December 1994, the hon. Member for Romsey and Waterside initiated a debate, to which another Minister of State, the right hon. Member for Eddisbury (Mr. Goodlad), replied. He went through the routine speech, reading from a brief that described the additional border controls late last year as "intrusive" and "unacceptable". He said that
we have made repeated strong protests to the Spanish Government in the last few weeks … There must be no question of their"—
that is, the controls—
being reimposed … the present level of checks is a disgrace and it is important that they cease permanently.
That is the sort of thing that Foreign Office Ministers routinely say when—prompted, it must be said, by Back Benchers—they come to the Dispatch Box. Their words have little or no substance, so I shall pay careful attention not only to the Minister of State's words but to his body language too, because so far Ministers have given no demonstration of real outrage or anger about Gibraltar.
We have let the people of Gibraltar down badly. We have had many opportunities to protect their interests, especially when Spain's accession to the European Union was being discussed. We ducked the issue then. Maastricht provided another opportunity. It is now time that the Foreign Office showed some anger.
The right hon. Member for Eddisbury further said in the same debate:
We have asked the Spanish authorities to substantiate their allegations about Gibraltar as a money-laundering centre and to provide examples where co-operation has been refused. To date we have received nothing."—[Official Report, 20 December 1994; Vol. 251, c. 1532–35.]
Has substantiation been received yet? If so, will the Minister tell us what it is and publish it so that the Government of Gibraltar may have the opportunity to rebut it?
In the Select Committee on Foreign Affairs this morning, my hon. Friend the Member for Ilford, South (Mr. Gapes) asked whether it was considered that the most recent turning of the screw against Gibraltar was in some part due to the United Kingdom supporting Canada in the recent fishing dispute. The Minister was somewhat ambivalent in his reply, but I assume that our embassy officials in Madrid buy El Pais, the principal newspaper there, which made it clear that Spain intended to hit back at the United Kingdom for supporting our Commonwealth partner during the recent fishing dispute.
I was visited by a courteous man from the Spanish embassy yesterday, who confirmed that the newspaper article reflected in substance the view of the Spanish Foreign Ministry. The headline of the El Pais article on


15 May stated that Spain was to put sanctions on Gibraltar and the UK for not helping in the struggle against contraband. The article stated that
the time has come for the UK to pay, and it is going to pay in Gibraltar.
The article quoted the Spanish Foreign Minister, Javier Solana, as promising to send Britain the bill for its lack of co-operation in the struggle against contraband, and for Britain's lack of support in the dispute with Canada over Greenland halibut. Mr. Solana has yet to decide how much the bill will be.
We know that Spain is contemplating additional sanctions against Gibraltar in about four weeks' time after its municipal elections. For that reason—if for no other—it is time that we drew a line and said that we are not going to tolerate this any further.

Mr. Colvin: Additional sanctions have been imposed against Canadian passport holders living in Spain who wish to travel into Gibraltar. It is difficult enough for a British passport holder, but it is twice as hard for a Canadian citizen to get into Gibraltar.

Mr. Mackinlay: I am pleased that I gave way, as I did not know that. The House of Commons needs to know that such nonsense is going on. I find it difficult to describe my dismay at the fact that there is not a much bigger row going on about the behaviour of the Spanish authorities. Where else in the world would such a situation prevail?
The British press have failed. They are often preoccupied with unimportant matters, but the freedom of British subjects should be as important to them as it should be to the Foreign Office. The Minister's stewardship is extremely weak. We have a patrician and pathetic Foreign Secretary who is prepared to do some of the apparently "big things", but when it comes to looking after a relatively small group of British subjects he ducks it. He is prepared to make perfunctory noises of irritation and outrage which are not backed up by action.
Great harm is being done to our relations with Spain, because Spain feels that it can try to wear down the British Government and make them uninterested in protecting the right of the Gibraltarian people to remain British. We should have had a statement in the House of Commons initiated by the Foreign Secretary about this matter many weeks ago. It should not be up to Back Benchers to raise the matter. The Foreign Secretary should be thumping the Dispatch Box and saying that we will not tolerate it. Previously, the House has had to depend on the hon. Member for Romsey and Waterside to raise the matter. When will the Foreign Office be proactive in promoting the interests of the Gibraltarian people?
The Foreign Office is prepared to insinuate that the Government of Gibraltar are less than diligent in trying to reduce smuggling, money-laundering and so on. However, the British Government are ultimately the police authority for Gibraltar, and not Chief Minister Bossano. The police are under the authority of the Governor and—ultimately—the Foreign Secretary. A financial services commission has been put in place that ultimately will be the responsibility of the Foreign Office, yet I understand that we are requiring the local legislature to introduce financial services legislation the powers of which exceed the legislation required of other countries in the European Union.
If there is a problem regarding speedboats working out of Gibraltar and smuggling between Morocco and the Spanish mainland, what on earth do we have the Royal Navy for? I should like to see the Royal Navy return to Gibraltar. There would, incidentally, be an economic spin-off. Some of what is left of the Royal Navy should be deployed in Gibraltar to help police to control smuggling in the area. What else is the Navy for? It is unreasonable to expect the Gibraltar Government to create a mini-flotilla to stop the contraband smuggling which clearly goes on, although the scale is exaggerated in relation to the involvement of Gibraltar. It is an excuse used by Spain to turn the screws on Gibraltar, and it provides a diversion from the Foreign Office's inactivity.

The Minister of State, Foreign and Commonwealth Office (Mr. David Davis): I congratulate the hon. Member for Thurrock (Mr. Mackinlay) on his good fortune in securing the debate, and I thank him for raising this important issue. It was a pity that he did not measure up to the importance of the occasion with the accuracy and understanding it deserves.
The hon. Gentleman referred to the dispute between Canada and Spain. When we started dealing with that dispute, there was much ignorant comment from the Opposition about our tactics. Those tactics delivered a good outcome, and were publicly supported by the Canadian Government at a later date. I am afraid that the hon. Gentleman's criticisms today were equally badly informed.
The delays at the Spain-Gibraltar frontier are intolerable and unjustifiable. I shall describe to the House in more detail how they came about, and I shall give some detail on what we have done to deal with the situation. Spain has attempted to justify the delays on the grounds of the Schengen convention, but I will show that that justification is wholly fallacious.
The recent delays for cross-border traffic are, sadly, not the first time that the Spaniards have tried to impede traffic at the Gibraltar frontier. Last October, they imposed a regime of secondary checks. Spain justified the checks on the ground that Gibraltar was not a member of the EC common customs territory. The checks produced delays of up to nine hours for vehicles crossing the border, and two to three hours for those crossing on foot.
The House may well remember the Spanish tactics on that occasion. Documentation was minutely checked, and members of the civil guard demanded to see spare spectacles, breakdown tools, sunglasses, fan-belts and even surgical gloves. Drivers who could not produce the required equipment were fined, and their cars impounded until the fine was paid. On some days, the civil guard relaxed its checks, checking documentation only or waving some cars through without checks. Spain claimed at the time that the checks were justified as an attempt to put an end to the problem of drug smuggling, which the hon. Gentleman mentioned.
I agree that there is a problem. We have our own concerns about it, which we have raised in private discussions with the Government of Gibraltar. My right hon. Friend the Foreign Secretary took up that matter and wider questions with Mr. Bossano on Monday evening, but this is neither the time nor the place to debate those issues. The important point is that none of them justifies


Spanish attempts to impede overland traffic. The illicit traffic is done by sea in fast launches, carrying drugs from Morocco to Spain. There is no evidence of such smuggling by land; no evidence that the Spain-Gibraltar land frontier plays a role in that trade; and no evidence that controls at the land frontier have an impact on smugglers' activities. Causing delays at the land border can only damage Gibraltar's economic base.

Mr. Colvin: My hon. Friend is not quite right; there is evidence of drug smuggling through the land frontier, but it is from Spain into Gibraltar.

Mr. Davis: I thank my hon. Friend. I should be interested to see that evidence.
We protested to Spain about the delays and I summoned the Spanish ambassador. The jargon in my profession is that we had a full and frank discussion. The problem was eventually resolved through dialogue. In advance of talks between Foreign Ministers in December under the auspices of the Brussels process, the blockages were lifted. It appears, however, that the Spaniards have returned to their previous tactics of squeezing Gibraltar, now using Schengen rather than customs checks as an excuse. That tactic will not succeed. It did not succeed in December and it will not be allowed to succeed now.
As the House already knows, the Schengen convention came into force on 26 March in seven European Union member states: France; Germany; the Benelux countries; Spain; and Portugal. The United Kingdom is not a party to the convention and has no intention of becoming one for reasons of which hon. Members are fully aware. On 27 March at 14:30, Spanish police began systematic passport checks on vehicle traffic and pedestrians both entering and leaving Gibraltar, causing a substantial build-up of vehicles on the Gibraltar side of the border. As yet there is no hard evidence of discrimination between Schengen and non-Schengen European nationals—discrimination between Spanish and Gibraltarians—which would be illegal, and we are monitoring the position carefully in case that arises.
Spain claims that the extra checks required by the Schengen convention cause those delays, but Schengen can be no excuse. Spain must provide adequate resources to carry out its checks without causing undue delays to European Union citizens. That has happened elsewhere in Spain, where there are no significant delays as a result of Schengen. In an extraordinary move, on 7 April the civil governor of Cadiz even went so far as to predict additional delays caused by the implementation of the Schengen convention over the Easter period, but he took no steps to increase staffing at the frontier to deal with the problem. He also announced that the Gibraltar frontier was an external frontier of Europe. That is nonsense. Gibraltar is part of the European Union.

Mr. David Young: Will the Minister give way?

Mr. Davis: If the hon. Gentleman will forgive me, I shall not do so as I am short of time.
At one point, there were teething problems with the introduction of the Schengen convention elsewhere in Europe. For example, there were queues at the German-Polish border. But those problems were nothing compared with the problem in Gibraltar. The House will

realise how damaging those delays can be for Gibraltar, the economy of which depends to a considerable extent on tourists and day trippers. Delays to traffic now are frequently of one or two hours, and have been of four hours or more. Delays on 19 April were reportedly the longest since the border was reopened in 1985. Sometimes delays are shorter and sometimes the traffic even flows smoothly, but the overall effect on business and business confidence is thoroughly negative.
The Government have already made their position extremely clear to Spain. We do not dispute that Spain has a right to maintain frontier controls to ensure that non-European Union nationals remain subject to immigration controls. The Prime Minister has frequently made it clear that we shall retain our right to impose such frontier controls and we have no problem with Spain doing so. But for European Union nationals, those controls should not amount to more than a light passport or identity card check to confirm that they are indeed European Union nationals. There is no need whatever for that to generate delays. The controls at the Gibraltar frontier go well beyond any such checks. They are as unacceptable because of the extreme delays that they cause.

Mr. David Young: Will the Minister give way?

Mr. Davis: No, I have only a few minutes left. The hon. Member for Thurrock spoke for four or five minutes longer than I expected.
We do not accept that the present delays at the Gibraltar frontier can be justified by the Schengen agreement. When the civil governor of Cadiz predicted problems over Easter, he implied that Spain would knowingly understaff the Gibraltar border posts. That is unacceptable. I do not know whether that policy was co-ordinated with Madrid. I have no evidence as yet that it was, and I hope that it was not to be taken seriously as an expression of Spanish Government policy. Part of the view from Cadiz appears to be that the Spain-Gibraltar frontier is an external frontier of Europe. As hon. Members know, Gibraltar is an integral part of the European Union and it must be treated as such. Article 227(4) of the European Community treaty extends the application of the treaty to Gibraltar. It states:
the provisions of this treaty shall apply to European Territories for whose external relations a member state is responsible.
The Schengen convention is an agreement between certain member states of the European Union but it is not a European Union agreement. It cannot supersede the rights of UK citizens, including Gibraltarians, under EC law. There should be no discrimination between Schengen and non-Schengen EU nationals at the border. We are closely monitoring the position to observe that.
Like many hon. Members, including the hon. Member for Thurrock, I saw yesterday's press reports suggesting that the Spanish Government were planning
to introduce sanctions against Gibraltar for refusing to crack down against the Rock's multi-million pound tobacco and drug smuggling industry".
It is not entirely clear what those sanctions are supposed to entail but press reports suggest that they include
a partial naval blockade of the Rock, virtual paralysis of the land frontier and fiscal penalties for the many Gibraltarians who commute to Spain".


As the House will understand, I have a habit of not believing everything that I read in the press. Although those reports supposedly quote authoritative sources in Madrid, I have no firm evidence that they represent the latest Spanish Government view. Let me leave the House in no doubt that, if there is any truth in press reports of Spanish intentions, I condemn them. It beggars belief that one European Union member state could even contemplate what amounts to a military blockade and sealing off its frontier with another member state. Those are the politics of the 18th century, not the 20th. I hope that that is the stuff of press speculation, and nothing more.
As the House would expect, the Government have acted promptly. We have stood up for the rights of Gibraltarians. I raised the matter with my Spanish counterpart when he was in London only a week or so ago and our ambassador in Madrid has protested to the Spanish Foreign Ministry. Our representations have had some success: the problem has not escalated further as it threatened to do in early April. I regret to report, however, that I can give little further positive news at this point.
Spain's formal response was to attempt to justify the unjustifiable. If there is no early improvement, we shall make further representations as necessary. As well as monitoring Spanish actions at the frontier, we have taken the matter up with the Schengen states and the European Commission and the Schengen secretariat and presidency. Those approaches have drawn attention to the nature and consequences of Spanish border controls.
We have made it clear to every one of Spain's Schengen partners that Spain's behaviour is unacceptable and discredits Spain. It also discredits the Schengen experiment. The Spanish action of choking the Gibraltar border is unacceptable—Schengen is no excuse. We have protested and the House has my assurance that we will continue to press our case until normal traffic at the border is restored.

Specialist Education (North London)

Mr. Hartley Booth: I pay tribute to the patient parents of autistic children, the fine work of care workers and teachers of autistic children, the outstanding work of the North East London Autistic Society and the pioneering work of the National Autistic Society. I should like to speak, most of all, on behalf of those thousands of people who cannot speak for themselves—those who suffer from autism. I intend to refer to the definition of autism, its history, research into it and recently published reports, and to make some recommendations.
Autism is a controversial disorder, but certain factors are agreed upon. It is a human disability or disorder that is biologically based, but is believed to be caused by organic brain damage. It is a developmental disorder, but lasts throughout life. It is found in those with all levels of IQ, but is commonly accompanied by mental handicap. It is described by Lorna Wing, an acknowledged expert, as
a severe disorder of communication, socialisation and imagination.
It is estimated that 1 million families in Britain are affected by autism, which affects far more boys than girls. It is found among those of all races, nationalities and social background, but it is reported that it is subject to cultural concealment in some groups.
The way in which autism manifests itself varies, but typical features include resistance to change, wandering about smiling—no reference to politicians—obsessional or ritualistic behaviour such head shaking or spinning, stereotyped movements, high levels of anxiety, lack of motivation, inability to transfer skills from one setting to another, vulnerability and susceptibility to exploitation, anger, depression, challenging behaviour, disregard of people with a closer attention to objects and self-injury. That is quite a daunting list.
The National Autistic Society has summed up what it calls the triad of impairments in autism as the absence or impairment of two-way social interaction; the absence or impairment of comprehension and the use of language and non-verbal communication; and the absence or impairment of true, flexible, imaginative activity, with the substitution of a narrow range of repetitive, stereotyped pursuits.
A psychologist at one of the departments of psychiatry in London, Simon Baron-Cohen, has summed up the condition as one that affects some children from birth or infancy and leaves them unable to form a normal social relationship or develop normal communication. As a result, the child may become isolated from human conduct and absorbed in a world of repetitive obsessional activities.
A parent, Mrs. X, has summed up what it is like to have an autistic child. She said that one has to have a sense of humour, otherwise one would go under. She also said:
It's being able to eat Sunday lunch while sprinting around the house at a very quick pace. It's telling yourself that nobody has ever died with lack of sleep and life is too short to lie in bed anyway. It's being able to look calm in a packed shop when your child is having a major temper tantrum on the floor. It's being able to smile and be pleasant to people when really you could scream and shout. It's being able to pretend you're deaf when everyone around you is tutting at your child's behaviour. It's being able to say, 'Yes, my child looks beautiful, but that will never make him/her normal, so what does that matter.' And mostly, at the end of a very long day, when you look at your child asleep in bed, it's being able to say, 'I love you'.


So speaks the mother of a young child, but what of an adult with autism? A case study of a young man called Christopher, aged 24, has just been produced by the National Autistic Society. It says:
Picture a handsome young 24-year-old accompanying his mother to Sainsbury's to do the weekly shopping. Imagine … the alarmed reaction of other shoppers and the acute embarrassment of his mother when Christopher decides to leap down the isles with the trolley, yelling exuberantly the chemical formula for manure ('S H one T' for the uninitiated)".
I hope that that last remark did not pass as unparliamentary language and that it is permitted in the context. The report also asks people to imagine what it is like when that young man, who as a child hated being cuddled or restrained in any way, now wants, in his 20s, to drape his 6 ft 2 in frame over the 5 ft 2 in frame of his mother. It asks us to consider how complete strangers feel when he decides to creep up behind them and shout "hairdryer" very loudly just for the fun of seeing their astonished reaction.
In total, there are about 25,000 children and 120,000 adults with autism in the United Kingdom. I want to consider how we can help them best. Autism was first diagnosed in 1943 by an Austrian psychiatrist, Leo Kamer. Its subsequent study has been dogged by as much misunderstanding as illumination. Autism is not caused as a result of emotional deprivation or emotional stress. It is not a withdrawal into a fantasy world or founded on a wish to avoid social contact. It is not due to parental rejection or "refrigerator" parents. It is not a middle-class disorder. It is not a mental illness, nor is it linked to genius or simply another word for mental handicap or a learning disability.
Although autism is widespread and is an important topic, there has, sadly, never been a debate in the House on it before today. Since 1971, the National Autistic Society has placed several reports in the Library of the House, but it was not until recently that a significant number of parliamentary questions have been tabled on it and reference made to it in debate. It was not, however, mentioned specifically in the Education Acts of 1981 and 1993, or in the code of practice.
The first ever published report on the facilities for autistic children in any region—north London—was published a fortnight ago. It was entitled "Going the Distance". I am pleased to see that my colleague from north London, the hon. Member for Hornsey and Wood Green (Mrs. Roche), is present. I wrote that report and I was ably assisted by Jonathan Bartley. A copy of it has been placed in the Library.
The report covers 52 constituencies in north London. We gathered evidence from 100 different sources, which revealed that there were about 1,500 cases of autism in a population of nearly 1 million. When certain facts are discounted, that means that one child in 450 under the age of 18 suffers from autism. We discounted those suffering from Asperger's syndrome, which is a similar disorder, but included all levels of autism. Of the number recorded, 75 per cent. have severe learning difficulties. That means that 1,100 children need specialist treatment in north London, but there are just 350 places for care. That means that the parents of those children have just a one in three chance of having their difficult children, whom they love, properly helped.
What is desperately needed is a broader knowledge of autism. We must identify what is needed. It is unsatisfactory that Barking and Dagenham, Brent,

Camden, Hackney, Haringey, Harrow, Havering, Kensington and Chelsea, Redbridge, Tower Hamlets and Westminster have no specialist facilities. That means that 11 out of 20 north London boroughs offer no facilities for autistic children. Barnet has taken the lead with such care, but, unfortunately, its provision is one third below the London average.
I should like to pay tribute to the outstanding work of teachers and care workers in my constituency. The recent work carried out at Oakleigh school was first class. Peter Carney, the head of Oak Lodge school for the past 20 years, has been outstanding in his work to assist autistic children. This morning, he told me that the expertise of his unit needs to expand to cover all age groups.
It is sad to note that the local council in Barnet treated my report as one about a fringe interest. That is especially sad, because its work for autistic children has been excellent in the past. The report condemns the distances covered by the parents of autistic children and describes it as a national scandal.
What can be done? First, early diagnosis is vital. It permits assessment and proper specialist remedial help, which can dramatically mitigate the effects of autism. Failure to recognise the condition early denies a child the chance to benefit from what help is available, and all too often condemns that child to severely life-limiting effects of the condition. It also sentences the community to paying much higher bills to care for what will be a bigger problem in later life, and condemns thousands of marriages to huge stress while disturbing thousands of siblings.
Secondly, as the report makes clear, far more day and residential facilities for autistic children are needed, in the right place. I was prompted to write the report by the story of a child, Matty Solomon, who was taken on a day's journey to the midlands for his treatment. Others beg, borrow and sell their possessions to send their children to the Higashi unit in Boston, in the United States, or spend seven hours a day travelling across London to take their children to the only help that is available—or, indeed, travel only as far as the waiting rooms provided by local authorities, where they are told that there is no help.
Let me tell the Minister that we need more help in this country now. We need more residential educational facilities, and more respite for parents; we also need to provide more day provision for autistic adults. The Government must begin by reviewing the needs of the forgotten children. I know that my hon. Friend the Minister is concerned about this topic; I hope that he will be able to promise the representatives of autistic children who are listening in the Public Gallery, and others who will hear the debate, that the Government will undertake a proper national review of all care needs for autistic children that goes beyond the report begun in 1992 by Jones and Newson, only the first stage of which was ever produced for the Library of the House.
It is now clear that more early care can be provided and paid for from savings made by early assessment and provision. The Government should use the Cabinet Office to co-ordinate the work of the many Departments that should be involved—the Department of Health, the Department for Education, the Department of Social Security and, indeed, the Department of the Environment, which funds local authorities. I have pledged to raise the money for more residential educational facilities in north London, and—along with colleagues who attended the


launch—promised to keep autistic children in the eye of Parliament. They may have been forgotten once, but they must never be forgotten again.

The Minister of State, Department for Education (Mr. Eric Forth): I am grateful to my hon. Friend the Member for Finchley (Mr. Booth) for raising this important issue. I acknowledge that—as my hon. Friend pointed out—it is surprising and disappointing to many that it has not been considered here before; he deserves credit for raising it today.
My officials and I have looked at the recent report "Going the Distance", which my hon. Friend co-authored. I, too, sympathise with the difficulties experienced by relatives and friends of those who suffer from the condition: they need the maximum support and help from schools, local authorities, Government and others.
Before dealing with the position in north London, let me say a little about the broader context. As my hon. Friend has acknowledged, the assessment of autistic children for a statement of special educational need, and then the identification of a suitable school for them, is a statutory responsibility of the local education authority in whose area they live. That is not simply an administrative matter. My hon. Friend's report rightly recognises that autistic children, like others with special educational needs, have widely differing requirements, depending on the nature and severity of their disorder. They require a range of provision to meet those needs; decisions about the provision can only be made locally, in the light of a careful assessment of the needs of each child by professionals who know the child. I am sure that that much is common ground.
As my hon. Friend said, it is not always easy to diagnose children with autism. In cases of severe disorder it is usually clear early in the child's development that something is wrong, and diagnosis may come quickly; for others, however, it may take much longer. Once the condition has been diagnosed, children may be educated in local education authority or grant-maintained special or mainstream schools, or in autistic units attached to special or mainstream schools. They may be educated in independent schools, such as those run by the National Autistic Society, or in non-maintained special schools. Placements at independent and non-maintained special schools are paid for by the LEA when that provision is specified in a child's SEN statement.
The majority of autistic children attend schools and units capable of meeting the needs of children with a range of special educational needs; perhaps one child in eight attends a school or unit that specialises solely in teaching children with autism. It does not necessarily follow that the provision for the majority of autistic children is not appropriate. In particular—as I am sure my hon. Friend is aware—the pros and cons of residential placement for autistic children remain the subject of much professional consideration and discussion.
My hon. Friend's report recommends a Government inquiry into the needs of autistic children, and he repeated that request today. As I know he is aware, the Department of Health and my Department have been sponsoring research by the university of Nottingham into current interventions for children with autism. Stage 1 of the project identified facilities and services in England and Wales that cater for children and adults, and summarised

information on the current arrangements for the education, treatment and handling of those with autism. A copy of the report of stage 1 was placed in the Library of the House in 1993.
Stage 2 of the research—which goes more deeply into the main characteristics of the forms of education and treatment identified in stage 1 and evaluates the effects of these approaches on the behaviour and skills of autistic children—is now in its final stages. I hope that the team's report of that work will be available later in the year. My officials and those from the Department of Health are in contact with the NAS about taking forward the results.
The evidence on which my hon. Friend draws is up to date. The fact is, however, that, while his inquiries were being undertaken, schools and LEAs began to revise their procedures to match the new code of practice on the identification and assessment of special educational needs. The code came into force in September last year. It incorporates tight time limits on the procedures under which LEAs and other professionals have to assess children and make statements of SEN where appropriate. In particular, the new arrangements under the Education Act 1993 give parents powerful rights in the selection of the school to be named in their child's statement.
When parents are not satisfied with the statement or with the school named by the LEA, they can appeal to the independent SEN tribunal. Since last September, the tribunal has been handling the first appeals made by parents dissatisfied with aspects of the statementing process, including the school named for their child by the LEA. Although I do not wish to diminish the importance of the case made by my hon. Friend, it is a fact that, of the 559 appeals to the tribunal up to the beginning of May, just 1 per cent. have concerned autistic children. I do not know what conclusions we should draw from that; I simply state it as a fact.

Sir Michael Neubert: Does my hon. Friend agree that that appeals procedure is very important to autistic children and their parents? A case in my constituency, involving Terry Murray junior, involved a tremendous tussle between the parents and the local authority. In making both assessment and provision, an authority can be both judge and jury, and that issue needs to be tackled.

Mr. Forth: Indeed. That is why the tribunal was established. It is now an independent and impartial body, to which parents who are not happy with what has happened can go and obtain a judgment independent of the local education authority. Early suggestions are that it will be an enormous step forward, providing new justice and fair treatment for parents of children with differing special educational needs, including autistic children. It goes further than that because part of the code of practice requires that needs specified in a child's statement must be mirrored by a clear statement of the provision that the authority is to make for that child. The link between needs and provision is more clearly established, and LEAs are better placed to judge the extent of any shortfall in provision than ever before.
I want to stress to my hon. Friend that I believe that what is new since last September—although it is early days to judge—is that a new clarity will emerge in the nature, effectiveness, use and targeting of moneys that LEAs establish for special needs provision, both at authority level and in schools. In time, there will emerge a new


understanding at every level of the availability of funds and the availability and provision of places for conditions such as autism. We are now in new territory, and an increasing amount of information will be available of the sort that my hon. Friend will be able to use—and we shall want to look at—to carry forward cases such as the one that we are considering today.
Enfield has recently increased its provision for autistic children; Islington is proposing to increase provision so that it can make regional provision for autistic children in north London. I have heard that yet another LEA in the area may propose to establish a unit for autistic children at a school for pupils with moderate learning difficulties. There is some suggestion that steps are already being taken—I should think partly as a result of the clarity provided by the code of practice.

Mr. Jeremy Corbyn: I apologise to the House for not being present for the speech of the hon. Member for Finchley (Mr. Booth).
The Minister of State is talking about expansion facilities. He will be aware that Harborough school in my constituency does excellent work with autistic children, and is a wonderful school in many ways. There are proposals to expand its provisions. What is the Government's attitude towards the expansion of provision to give better facilities? I am well aware that many people successfully appeal against the non-provision of places, but there is no special school available. Although the appeal process is welcome, it is limited if, ultimately, there are no places to be found.

Mr. Forth: The hon. Gentleman makes a fair point. The Government's attitude is that we would want to give support and a fair wind to any authority that comes forward with sensible, positive proposals to deal with such need. It is rightly a matter for the authority, with its local knowledge, to decide what should be done. We would not want to stand in the way of well-thought-out and properly designed proposals that meet a clearly identified need in the locality or beyond. I hope that there will be no problem.
Given the spectrum of needs and the range of provision that may be appropriate, it is difficult to pin down a shortfall in the way suggested by my hon. Friend the Member for Finchley. Although many LEAs maintain their own specialist provision for children with autism, there is a danger that some will be tempted to place their own children first. If that means that other autistic pupils are on lengthy waiting lists, the LEAs responsible for those children will have to give serious and early consideration to whether there are alternative approaches to meeting their needs.
Not every LEA will be able to, or need to, make its own specialist provision. In some cases, collaboration between LEAs may well be desirable; but, in the first instance, it is for each LEA to satisfy itself about the adequacy of provision for the children for whom it has responsibility. It would be open to, say, the National Autistic Society to convene discussions with LEAs to seek a common view of the position locally. If those discussions led one or more LEAs to publish statutory proposals for new schools or units, the Secretary of State would want to consider

them carefully, together with any associated bids for capital support—the point made by the hon. Member for Islington, North (Mr. Corbyn).
Another factor in the equation is that 11 of the boroughs in north London are at stage 2 or 3 of the grant-maintained process. That means that the Funding Agency for Schools may also be able to propose new provision. I understand that the FAS is considering carrying out a survey of special educational needs units at grant-maintained schools. If a need were established for more autistic provision, the FAS could have a role in considering how such provision should be made. In any event, I would hope that the FAS could be associated with any local discussions on that subject. Such discussions could be fruitful for all parties involved, and I hope that they will consider that proposal with some urgency.
Another route would be for voluntary bodies or charities to consider establishing, or expanding existing, non-maintained special schools to cater for children with autism. Those are schools run by voluntary bodies on a non-profit-making basis. The voluntary body would need to apply to the Secretary of State to open a school or change the status of an existing school. Such applications are considered sympathetically, but stringently. A non-maintained special school can apply to the Secretary of State for capital grants to improve existing buildings or to build new premises, although I must stress—nobody will be surprised to hear me say it—that the money for such purposes is, of necessity, limited. We try to use it in the most effective way. I would therefore expect most of the money in those cases to come from the charity's private income. The running costs of such schools are normally covered by payments from LEAs that place children at them.
I hope that I have demonstrated to my hon. Friend the Member for Finchley that the Government are well aware of the importance of appropriate provision for autistic children. The Government's job is to ensure that there is a clear framework in which local authorities and other professional services, together with parents, can work out solutions to match each child's needs and to ensure that information is available nationally to help authorities determine best practice. We have achieved that in the Education Act 1993 and the code of practice.
We now have the opportunity to identify the needs more clearly and to match them to the provision. We can judge more clearly the effectiveness of existing funds at every level. There is scope for further action to be taken—perhaps headed by the NAS, and no doubt helped by my hon. Friend the Member for Finchley. That action would involve the LEAs and the FAS and would carry forward my hon. Friend's work, for which I praise him. We must ensure that the provision for this vulnerable group of school-age children—and those who are older—is the best available. We must give every support, not only to the young people involved but to their families. I am sure that we all share that aim.
I hope that my brief remarks have contained some hopeful signs for the future. I wish my hon. Friend well in pursuing the interests that he has brought before the House today.

.Sitting suspended.

On resuming—

It being half past Two o 'clock, the motion for the Adjournment of the House lapsed, pursuant to Order [19 December].

DEATH OF A MEMBER

Madam Speaker: I regret to have to report to the House the death of Geoffrey Kenneth Dickens Esq., the Member for Littleborough and Saddleworth. I am sure that hon. Members on both sides of the House will join me in mourning the loss of a colleague and in extending our sympathy to the hon. Member's family and friends.

PRIVATE BUSINESS

BIRMINGHAM ASSAY OFFICE BILL

MALVERN HILLS BILL [Lords]

As amended, considered; to be read the Third time.

Oral Answers to Questions — ENVIRONMENT

Opencast Mining

Mr. MacShane: To ask the Secretary of State for the Environment what steps he is taking to ensure that the environment in areas where opencast mining is permitted is not damaged by the activity of opencast mining operators. [23191]

The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): Tight, improved guidelines which upgrade environmental requirements on opencast mining were published last July. They would apply to any new permissions

Mr. MacShane: I thank the Minister for his short reply. First, is he aware of the great concern about the incidence of asthma and bronchitic disease that is linked to opencast mining? Secondly, is he aware of concern at the Orgreave site in south Yorkshire, where phenol in the ground may be getting into dust and posing a real contamination problem? Thirdly, is he aware of the concern in Rotherham about a proposed opencast mine near Greasbrough? If the mine is allowed to go ahead, it will destroy the visual amenity of a beautiful green-field site in my constituency. In light of that, will the Minister agree to hold a public inquiry in south Yorkshire to explain the Government's real opencast mining policy and allay my constituents' fears?

Sir Paul Beresford: The hon. Gentleman will understand that I cannot pick a particular case for inquiry. I imagine that he is aware that the mineral planning guidance note MPG 3 gives his Labour local authority considerable scope on environmental issues, such as the visual side, noise, blasting, dust—which he mentioned—water, transportation, the built environment, nature conservation, subsidence and restoration. In addition to that, my Department is currently undertaking research into dust, blasting and transport and I hope that the results of that research will assist in alleviating the hon. Gentleman's concerns.

Mr. Batiste: Is not the real issue where opencasting should take place? Should not priority be given to areas where dereliction is being cleared up, and should not communities' overall environmental and sustainable development needs be taken into account in a strategic sense when considering individual applications?

Sir Paul Beresford: My hon. Friend is absolutely right. Operators will need to demonstrate that real benefits will result from their proposals, particularly if they wish to work in sensitive green-field sites.

Mr. Illsley: The Minister will be aware that there is concern that private opencast operators are not meeting their obligations to restore opencast sites. Will the Minister consider some mechanism that will allow the Government to enforce private opencasters' obligation to restore those sites? That would prevent a company from


allowing a subsidiary company to go into bankruptcy and thus avoiding its obligation to restore opencast sites, as occurred in the case of Sheffield Airport Ltd.

Sir Paul Beresford: The hon. Gentleman will be aware of our concern and we shall certainly look into any individual case about which he may care to write to me.

Mr. John Marshall: Will my hon. Friend remind those carrying out a vendetta against opencast mining that it is more economical to produce coal that way, it will lead to lower electricity prices and it will benefit consumers, about whom they do not care?

Sir Paul Beresford: My hon. Friend is absolutely right. He will agree that the new requirements on environmental issues protect the community as well as providing employment opportunities.

Mr. Skinner: Is the Minister aware that one of the problems that local authorities have nowadays, as opposed to 15 years ago, is that when they are presented with an application for an opencast cite to be developed, they are told by local officials that, in some circumstances, if they oppose the case and it goes to appeal, councillors will be surcharged because, under current planning considerations, the Government have got them by the short and curlies? As a result, although they would like to oppose every single one, in many cases they are frightened to do so because they can be driven out of public office. Why do not the Government change that?

Sir Paul Beresford: The hon. Gentleman's imagination always runs away with him. If he looks at MPG 3, he will see the ammunition and strength that local authorities have now to protect local communities, while reflecting upon the environmental improvements on one side, and the economic benefits on the other.

Sir Donald Thompson: Will my hon. Friend reflect carefully on what the hon. Member for Barnsley, Central (Mr. Illsley) said? The problem of £100 companies welshing on the deal to reinstate is not a new one; it has happened for generations in gravel extraction and other industries. Surely we are adroit enough to stop it happening here.

Sir Paul Beresford: It is fairly obvious that my hon. Friend has a particular case in mind. I would be grateful if he would write to me about it.

European Regional Funds

Mr. Alton: To ask the Secretary of State for the Environment how much of the funds for objective 1, designated for the financial year 1994–95, have been spent; how much is retained by the Department; and if he will make a statement. [23192]

The Minister for Local Government, Housing and Urban Regeneration (Mr. David Curry): Merseyside's European funding is for the period to 2001. Of the £55 million transferred by the Commission to the United Kingdom, £23.7 million has been authorised for payment. The rest is held by Government under the rules set down by the European Union to make further payments as claims for approved projects are submitted.

Mr. Alton: I am grateful to the Minister for that reply. Notwithstanding what he said, does he recognise that there

is some concern that, in the first part of the overall period in which money can be spent, there has been a failure to deliver money to projects which had hoped to be under way by now? Does he agree with the recommendations of the monitoring committee which has been working in partnership with the Government, and does he intend fully to implement its proposals? What will happen to the money that has already been given to the Government by Brussels? Will it accrue to the advantage of the Government or to Merseyside?

Mr. Curry: The answer to the final part of the question is that the money takes the form of authorisation for payment. There is no crock of gold in a bank in Merseyside and it does not earn interest, so it cannot earn interest for the Government. It can be spent only on projects which have been approved. Those projects are sufficient to draw down the entire amount that was sent over in the year that we are considering. Only about 20 out of 800 projects have not received final approval because of details that need to be settled, and we are on target for the second tranche of projects for which we should get clearance in July.

Mr. Wareing: Is not there a tendency for them to accumulate, because there is a complaint in Liverpool of slothfulness in dealing with the bids?

Ms Eagle: And in The Wirral.

Mr. Wareing: And in The Wirral, as my hon. Friend the Member for Wallasey (Ms Eagle) says. Should not the Government increase the resources of the secretariat so that the process can be speeded up, or are they quite happy to continue at the same old steady pace?

Mr. Curry: The hon. Gentleman is not being reasonable. The Commission released the schemes only last July, so the 1995 schemes could not even begin to be considered until the second half of the year. Nearly 800 of those schemes have been approved. The next tranche will fall due in July. We are on schedule for dealing with them in July. I recognise people's anxiety to get the schemes under way because of Liverpool's particular status, and I shall ensure that the regional office does everything in its power to do so. I spoke to the director again yesterday and he told me how strongly the office is committed to making sure that the schemes progress.

North Sea Ministerial Conference

Ms Ruddock: To ask the Secretary of State for the Environment what policy his Department will pursue at the fourth North sea ministerial conference due to take place in Denmark on 8 to 9 June. [23193]

The Secretary of State for the Environment (Mr. John Gummer): I have placed a statement of United Kingdom policy objectives for the North sea conference in the Library. I am particularly concerned to achieve protection for species and habitats outside territorial waters; comprehensive measures, within the common fisheries policy, to control over-fishing; internationally co-ordinated research to improve knowledge of the possible effects of some chemicals on reproductive systems; and more effective enforcement of international rules against pollution from shipping.

Ms Ruddock: The Secretary of State will recall that under his Government Britain became known as the dirty


man of Europe. Does he now want us to be known as the scrap merchant of Europe? Given the Greenpeace protest and Danish determination to raise the issue, what environmental reasons will he give to the North sea conference for permitting the towing of Brent Spar into the Atlantic for dumping rather than bringing it ashore for dismantling, recycling and reuse?

Mr. Gummer: I am sorry that the hon. Lady did not watch the television programme in which David Bellamy made it clear that we are now the clean man of Europe and that that is the view of all environmentalists. The hon. Lady should talk to some real and serious environmentalists before trying to make party political comments out of her nation's interest. The national interest is simply that we should be dealing with those matters which pollute the North sea and obeying international agreements. In dealing with our North sea oil rigs, we shall follow to the word the agreements of Paris and Oslo. We shall do precisely what we agreed to do internationally. The hon. Lady should be proud to live in a country that is now leading the world in these matters.

Mr. Mans: May I encourage my right hon. Friend to take precisely the same proactive approach at the North sea conference as he did at the conference on climate change? We have proved conclusively that, because we abided by the rules and managed to achieve what we said we would achieve, Britain led and others were forced to follow. May I encourage my right hon. Friend to take precisely the same approach at the North sea conference to ensure that those on the continent enforce what they have signed up to as we have done in the past?

Mr. Gummer: We are in the top third for meeting targets set by the previous North sea conference. We are concerned with a number of issues, not least the bad cycle which results from industrial fishing, particularly by the Danes who turn the fish into cow food and feed their cows on it, resulting in considerable agricultural pollution in the North sea. That is something that we want to stop.

Environment Agency

Mr. Steen: To ask the Secretary of State for the Environment what is his forecast of the annual running costs of the new environment agency; and what are the current costs of carrying out the same work within existing organisations. [23194]

The Minister for the Environment and Countryside (Mr. Robert Atkins): The work to be transferred to the environment agency is valued at £528 million at 1994–95 prices.

Mr. Steen: Although Conservative Members welcome the Government's commitment to protecting the environment, there is just a little concern about the advertisements that appeared in the national papers for the director whose salary will be twice that of Cabinet Ministers and who will have 9,000 staff who will no doubt be serving notices and enforcing summonses. Will not the new agency impact on Britain's business culture by adding cost to our products as a result of the number of civil servants who will be rushing around asking businesses to comply with this or that regulation?

Mr. Atkins: There is an old adage that, if you pay peanuts, you get monkeys. We are in the business—

[Interruption.] We are in the business of ensuring that we get very large monkeys—[HON. MEMBERS: "Stop digging!"] We are in the business—

Madam Speaker: I suggest the Minister starts again.

Mr. Atkins: I know exactly where I am, Madam Speaker.
We are in the business of ensuring that, whoever is appointed chief executive of that most important agency, which is a product of far-seeing legislation that the Government are introducing, will be paid the right amount to do an important job. Industry will need to ensure that the people who run that agency can speak the same language as it does, so that the legislation is implemented to the highest standard.

Mr. Pike: Will the Minister recognise that, on occasion, the National Rivers Authority has not had the necessary powers or finances to deal with certain river pollution, especially from former mine workings? Can he give the assurance that the Environment Bill will give the authority powers to eradicate that pollution from the parts of the country where it is a major problem?

Mr. Atkins: There is a question on the Order Paper about that issue, which I intend to answer, but I can give the hon. Gentleman the assurance that he wants.

Mr. Sykes: As an adequately paid Back Bencher, I assure my hon. Friend that the national parks currently operate well under the aegis of the Department of the Environment. One thing that is extremely important is the fact that, under the new arrangements, we shall seek far more professional, and perhaps more local democratic representation in the national parks service. Can my hon. Friend give us an assurance today that, for example, parish councillors will be asked to serve on the new national parks board?

Mr. Atkins: My hon. Friend makes an extremely important argument. My right hon. Friend the Secretary of State and I are examining it closely. In discussing the Environment Bill, currently in Committee, we have not reached the provisions relating to the national parks, but I intend to ensure that there is better representation from those who live and work in the parks, who are, in my book, the most important people there.

Mortgage Arrears (Repossessions)

Mr. O'Hara: To ask the Secretary of State for the Environment what is his latest estimate of the number of households likely to lose their homes through repossession for mortgage arrears in the next 12 months. [23195]

Mr. Curry: The Government do not make predictions about future repossessions. The latest figures published by the Council of Mortgage Lenders show that the number of properties taken into possession in 1994 was the lowest since 1990 and 35 per cent.lower than the peak in 1991.

Mr. O'Hara: Such complacency will bring no comfort to the 250,000 home owners who continue to be more than six months in arrears with their mortgages, the 1.2 million home owners trapped in negative equity in a declining housing market or, importantly, those sick, disabled and unemployed home owners who are under threat of losing their homes—12,000 is the calculation of


the Council of Mortgage Lenders—as a result of the proposal to cut their income support when they get into difficulties.
How can the Minister be so complacent, when the Government of which he is a member have collectively and comprehensively made such an unholy mess of private and public housing provision?

Mr. Curry: The first thing is that no Conservative Member is complacent about that, but equally, no one who suffers from that problem will be comforted by a political rant on the subject. [Interruption.] We are conscious of the difficulties—[Interruption.] It would be easy for anyone to stand at the Dispatch Box and exude all sorts of phoney rhetoric.
This is a serious matter. The people in those circumstances are unfortunate and I am anxious that they should recover. That is done by taking that into account in the fixing of interest rates—trying to maintain low interest rates. The level of interest rates is the single most important factor.
One must try to ensure that one has sensible relationships with mortgage lenders so that they are understanding and, when people make an honest attempt to make repayments, they make, and continue, arrangements to accommodate them. One must try to ensure that the economy is managed so that we continue to bring people out of unemployment and into employment and so that we can offer hope to people who now find themselves in difficulties. I am as worried about that as anyone in the House.

Mr. Thomason: Will my hon. Friend confirm that people's desire to own their own properties remains as buoyant as ever, notwithstanding the difficulties over repossessions, and that Labour Members' consistent attempts over the years to talk out home ownership have failed again and again? Nearly all the British public want to own their own home.

Mr. Curry: About 230 people a day in Great Britain are entering into home ownership thanks to the various schemes that help them to do so. That can be only because a large number of people believe that that form of tenure suits them. The Government will continue to assist them to acquire such tenure.

Mr. Raynsford: Will the Minister confirm that approximately 1,000 people a week are losing their homes as a result of repossession, and that his Department has received a report from Dr. Janet Ford of Loughborough university, which, I understand, will be published shortly and which demonstrates that private insurance will not provide an adequate safeguard for many home owners in financial difficulty? Will he therefore press his colleague, the Secretary of State for Social Security, to withdraw his ill-conceived and damaging proposals to limit income support, which are already damaging the market and will lead to an increase in repossessions?

Mr. Curry: The report will be published tomorrow, so the hon. Gentleman will have the satisfaction of being able to read it. It is reasonable, however, to ask that private provision should take some of the strain from public provision. The increase in the number of households and the demands on the public purse are such that we must reconsider the frontier that divides the two. My right hon. Friend will have heard what the hon. Gentleman has said. I would be interested to know

whether it is Labour party policy to reverse the changes—that is not clear—and how that sits with the new financial probity that, we are told, has fallen on the Labour party.

Mr. Nigel Evans: Does my hon. Friend agree that the best way to minimise the number of repossessions is to ensure that we have, as we do at present, the proper conditions for economic growth? That is shown again by today's announcement that unemployment has fallen for the 20th successive time. Does he further agree that we must ensure that we have not only low interest rates but low inflation levels, and that we must encourage inward investment in this country so that we shall be one million miles away from the social chapter and the minimum wage?

Mr. Curry: It is certainly true that low inflation levels, which can be reflected in low interest rates, are one of the prime factors in helping people to resume their payments. Keeping unemployment falling and people finding employment is equally important in enabling people to resume their payments. Many people manage to recover their arrears. That is to be welcomed and is an essential way forward.

Latham Report

Mr. Gapes: To ask the Secretary of State for the Environment if he will introduce legislation to implement the recommendations of the Latham report in the current Session of Parliament. [23196]

The Parliamentary Under-Secretary of State for the Environment (Mr. Robert B. Jones): The Government have no plans to introduce legislation in the current Session. My right hon. Friend has today published a consultation paper on Sir Michael Latham's recommendations on fair contract conditions.

Mr. Gapes: Is the Minister aware that many companies, including Essex Electrical in my constituency and members of the Electrical Contractors Association, will be bitterly disappointed that the Government have no immediate plans to introduce legislation? Will he give the House an assurance that that is not due to opposition from some of his ministerial colleagues in the Department of Trade and Industry, who have ideological objections to regulation?

Mr. Jones: The hon. Gentleman's constituents and indeed everyone else would be astonished if we made such an announcement before the end of the consultation period on the first consultative document, and before we had published the second consultative document. The key to success with the Latham recommendations is that we proceed through consensus throughout industry. That is the Government's target. I hope that that will be supported by consensus in the House.

Mr. Lester: Does my hon. Friend consider Sir Michael Latham's work, which I think most of us recognise as thorough and helpful, to be important? Many of us have had problems with subcontractors who have gone bankrupt because they have not been paid for work that they have under taken. The work of my friend Michael Latham was worth while. I hope that the consultation documents will carry things forward to a satisfactory conclusion.

Mr. Jones: I am grateful to my hon. Friend. I have no hesitation in praising the work that Sir Michael Latham has done, but he was not the only one. Many people in


the construction industry have done an immense amount of work, taking his reports forward into the proposals that have been issued as consultative documents. As one who worked in the construction industry before I was elected to the House, I have every sympathy with subbies. Poor treatment of subcontractors is in no one's best interest. It does not deliver good projects, a healthy industry or good value for money, and we must combat that.

Minewater Pollution

Mr. Mullin: To ask the Secretary of State for the Environment what representations he has received from the National Rivers Authority regarding the allocation of responsibility for the control of minewater pollution; and if he will make a statement. [32197]

Mr. Atkins: My Department maintains regular contact with the National Rivers Authority about minewater pollution. Responsibility for the control of such pollution lies in the first instance with mine operators.

Mr. Mullin: Will the Minister confirm that the National Rivers Authority is anxious that the Coal Authority should be given a statutory responsibility for pollution arising from mines that have been closed? Although it is working well with the Coal Authority now, should the money run out or should there be a change of policy, there is nothing to stop the authority walking away from mine pollution with potentially devastating consequences. Does the Minister plan to do anything about that?

Mr. Atkins: I hope that the hon. Gentleman will recognise that we hold similar views on the determination to ensure that abandoned mines do not cause detrimental pollution. The hon. Gentleman will be aware that during a recent visit to Durham by the chairman of the Coal Authority the matter was discussed between county councillors and the Coal Authority. Durham county council was able to issue a favourable press release afterwards saying that a number of concerns had been addressed. The Coal Authority has a continuing commitment to do what is necessary to treat abandoned mines because of the possibility that they may cause pollution and has confirmed that the pumping, where necessary, will continue. That commitment stands firm.

City Pride

Mr. Enright: To ask the Secretary of State for the Environment what plans he has to extend the city pride initiative. [23198]

Mr. Gummer: Birmingham, London and Manchester have made tremendous progress in pursuing city pride. We will look at what they have achieved before extending the initiative.

Mr. Enright: Is not the way in which the Government look at special schemes and then set them up, excluding other areas, somewhat arbitrary? I am thinking particularly of the single regeneration initiative, which is not all bad and in which some very good things are happening. However, its arbitrary nature is excluding certain areas. South Elmsall, South Kirkby and Upton have been put together, but Hemsworth in the middle, which has equally desperate needs, is not included and that impedes other initiatives.

Mr. Gummer: The single regeneration budget is not in any way arbitrary. People are able to bid for the money

and we try to ensure that the bids which provide the best use of the money are met. We try to help those who have failed in the first round to prepare for the bids in the second round. The hon. Gentleman will find that the mix that is achieved—a mixture of meeting the need and finding the best capacity contra to the money put in by the taxpayer—is valuable.
Birmingham, London and Manchester were not chosen arbitrarily. They are the three largest towns in England and it seemed sensible to spread the choice geographically. We must remember that Birmingham has not yet launched its final draft of city pride, but if we find that those cities produce what we hope that they will, we will look to see whether others want to participate. The scheme does not exclude others. When I first announced it, I said that if cities wanted to start outside the scheme, they could do so in the same position as Birmingham, Manchester and London.

Mr. McLoughlin: Will my right hon. Friend consider the possibility of using more private sector involvement in the schemes? I am sure that he is aware of the huge amount of money that the Government are spending on regeneration throughout the country, in both city pride and city challenge. The Government get very little credit for the amount that is spent, perhaps because they usually have to work with hostile Labour local authorities.

Mr. Gummer: It would be helpful in this area to recognise the very large amount of money that the taxpayer puts into these schemes and the significant success of bringing in private capital. There ought to be cross-party support for that. If we get at least £4 and sometimes even £5 or £6 from the private sector for every £1 put into these schemes, we get a great deal more money to help people and to provide the things about which both sides of the House ought to be concerned.
It seems to me that we can at least agree that this initiative is sensible and proper and successful. We must see how we can make it more successful and effective. I want to do that by getting greater co-operation.
Let us take the Manchester scheme. Under city pride, for the very first time, Manchester council is working well with the other two authorities that make up Manchester—Manchester council hardly talked to one of those authorities previously, even though it was a Labour-controlled council—and with the urban development corporations, which were damned from the housetops when they started.

Mr. Vaz: The whole House realises that city pride is nothing more than a public relations exercise initiated by a beleaguered Secretary of State who has run out of ideas for regeneration policy. Despite that, the Manchester, Birmingham and London pride initiatives have used their own time, efforts and resources to prepare excellent policy documents. How does the Secretary of State intend to turn those vision statements into reality when, as he knows, city pride offers no extra resources to any of those local authorities?

Mr. Gummer: I am told by the press that the hon. Gentleman is always a nice man, so I will answer him as nicely as I can, given the total absence of truth in his question. The truth of the matter is that Manchester, London and Birmingham have produced their documents and are very pleased with the co-operation, not only with the Government as a whole but with the Government


offices concerned. In one way or another, they have all received significant sums from the single regeneration budget. I am pleased to say that Manchester asked me, as Secretary of State, to launch its scheme, so keen was it on city pride. The hon. Gentleman ought to talk to some of his supporters occasionally.

Mr. Ian Bruce: Does my right hon. Friend appreciate that it does not always need Government cash to get those principles in place? Will he look at what Purbeck district council has done in setting up Purbeck Pride, with only private sector money and not a penny from the Government? The council is creating the sort of pride that is bringing more tourism and business into Purbeck without a penny of public subsidy.

Mr. Gummer: My hon. Friend will have noticed that the hon. Member for Leicester, East (Mr. Vaz) not only laughed at the activities of Labour councils in Manchester and Birmingham and many of those in London that are working for city pride, but evidently finds any reference to a rural area incredibly comic. The fact is that the Labour party does not care about rural areas at all. My hon. Friend points out that in many rural areas, entirely by private initiative working with local authorities, we are doing a great deal to achieve what must be done to secure better opportunities for jobs and employment in those areas.

Environment Agency

Mrs. Helen Jackson: To ask the Secretary of State for the Environment what steps he will take to ensure that the operations of the proposed environment agency are open to public scrutiny. [23199]

Sir Paul Beresford: We will expect the agency to provide clear and readily available information on its work. It will be subject to the Environmental Information Regulations 1992 requirements to maintain public registers of information on activities which it regulates, and it will be expected to meet the requirements of the Government's code of practice on access to Government information.

Mrs. Jackson: Does the Minister agree that the public are usually the best environmental watchdogs and that they need to have access to all information? Has he forgotten that it was his Government who made local government comply with access to information regulations? Why will he not ensure that the environment agency will be subject to the same rules of accountability as local government?

Sir Paul Beresford: The hon. Lady forgets the points made to her in Standing Committee. There will be no lack of information on the agency's activities, which will be subject to a variety of requirements. I also remind her of the Environmental Information Regulations 1992, the legislation on public registers, the principle of openness set out in the Government's code of practice on access to Government information, the code of best practice for board members and public bodies, the duty to produce an annual report, and public registers to provide information about licences.
The Environmental Information Regulations 1992 provide a duty to respond to environmental information requests and provide for the inspection of public registers which are available free of charge. Copies can be obtained

at a minimal cost. The agency's management statement will ensure public access to meetings of the agency's regional and local committees. Ministers will be accountable to Parliament, too. Finally, the agency can, if it wishes, hold meetings in public. There is a deluge of information.

Mr. Forman: Is my hon. Friend aware that his diffident and understated answers will be welcomed by his colleagues? Is he further aware that, in the interests of openness, it is important that the public are reassured about some of the leading environmental problems, especially air pollution? Will he see to it that those problems are tackled with the urgency that they deserve, especially in view of the concern felt by my constituents about the possible link between asthma and air pollution?

Sir Paul Beresford: I ask my hon. Friend to consider the Government's reaction to environmental factors. If he follows the progress of the Environment Bill, I think that he will find that we have taken much of that concern on board.

Co-operative Housing

Ms Hoey: To ask the Secretary of State for the Environment what support he will give to ensure the increase of housing for co-operative ownership. [23200]

Mr. Robert B. Jones: The Housing Corporation's grants to co-operative housing associations for construction, rehabilitation and repair this year amount to £9.514 million.

Ms Hoey: The Minister will be aware of the many successful housing co-ops in my constituency, especially in the Waterloo and Coin street area. However, is he also aware that there was no new allocation for housing co-ops in London this year and that there is a feeling, certainly within the Housing Corporation, that the Government's commitment to housing co-ops is perhaps not quite so strong as it was? What is the Department's commitment to housing co-ops?

Mr. Jones: Allocations by the Housing Corporation reflect the priorities that local authorities place on particular bids. There is little doubt that some place issues other than housing co-operatives higher up the priority list. The hon. Lady will be aware that that is sometimes because of hostility on the part of local authorities. She does not need to go back very far to remember the hostility of the Labour-controlled Greater London council to the Coin street co-operative in her area.

Mr. Congdon: Does my hon. Friend agree that we should do everything we can to continue the extension of home ownership by whatever means possible, including the extension of shared ownership, the assisted private purchase scheme and, perhaps just as important, the extension of the right to buy to tenants of housing associations?

Mr. Jones: The Government remain deeply committed to the idea of sustainable home ownership. In addition to the various measures mentioned by my hon. Friend, we are always anxious to hear of new ideas for promoting home ownership from him or anyone who is interested.

Wind Farms

Mr. Hutton: To ask the Secretary of State for the Environment if he will make a statement about planning guidance for wind farms. [23202]

Mr. Gummer: The Government have issued planning guidance for wind farms in planning policy guidance note 22, or PPG 22, which was entitled "Renewable Energy" and published in February 1993.

Mr. Hutton: While recognising the important environmental benefits of renewable energy, especially wind farms, is the Secretary of State aware of the concern felt by people living in Askam and Ireleth in my constituency about plans to develop wind farms near there? Will he consider strengthening and amending paragraphs 59 to 69 of PPG 22 with a view to making specific reference to the siting of large wind turbines close to towns and villages?

Mr. Gummer: I have to be convinced that we need to tighten it further. I have not yet seen a case in which the local authority has not been able to stop the development of wind farms in circumstances where the intrusion is such as that described by the hon. Gentleman. One of the problems with wind farms is people's failure to recognise that you don't get owt for nowt: wind farms may be a clean way of producing electricity, but they have a real visual and noise impact. Some people who object to another form of energy demonstrate against it and demand wind farms, but as soon as one is proposed they demonstrate against that as well. We have to recognise that wind farms are suitable only in places where they will not have an impact of the type already covered in the planning policy guidance note.

Mr. Hawkins: Does my right hon. Friend agree that the irony of the history of wind farms—this is true of Lancashire, Yorkshire, Cumbria and other parts of the United Kingdom—is the way in which the single-issue lobby groups have always dominated the Labour party's agenda, on the environment and everything else? Groups used to call for such things until they realised how unpopular their proposals were. Now they oppose them. That is the way of all single-issue lobby groups: they can never decide whether they are in favour of anything, and as soon as they get something they have campaigned for they realise that they did not want it in the first place.

Mr. Gummer: I agree with my hon. Friend. I was never able to attend any kind of meeting on nuclear power, for example, without being told that the real answer was to have windmills. The moment one proposes windmills, however, the real environmental problem arises, to which I shall return. We need a mix of energy supplies and we should recognise that to get energy we must accept disadvantages. Those disadvantages occur even when we consider harnessing wind power.

Supermarkets

Mr. Battle: To ask the Secretary of State for the Environment how many planning applications for supermarkets are awaiting his decision for a public inquiry. [23203]

Sir Paul Beresford: Approximately 50 proposals for supermarkets over 4,000 sq m are awaiting decision.

Mr. Battle: The Minister may be aware that Leeds development corporation recently approved a large-scale supermarket development in the green Kirkstall valley, despite opposition from the local authority, councillors, residents and businesses, and flying in the face of his recent planning guidance. I urge the Minister to call in the application, even at this late stage. Road access has not been sorted out and the development could jeopardise the town centre of Bramley and close down all its shops. Will the Minister call in the application and put forward a proper scheme which is acceptable to the whole community?

Sir Paul Beresford: I am happy to look at it, but if planning permission has been given, there is nothing that the Department or the Government can do.

Sir Patrick Cormack: While my hon. Friend is pondering such decisions, will he bear it in mind that the transition from a nation of shopkeepers and small shops to one of supermarket shoppers has not been wholly beneficial?

Sir Paul Beresford: Yes, I will. I am sorry that my hon. Friend did not attend the recent debate on that very subject, when all hon. Members were in agreement. In fact the hon. Member for Leicester, East (Mr. Vaz) called it a love-in, which may be the reason why my hon. Friend was not present.

Mr. Betts: Is the Minister aware of two planning applications in my constituency which have been treated in completely contradictory manners? At Oxclose farm, the council rightly turned down a planning application for a superstore in a green-field site which was not served by any public transport, but an inspector delegated by the Secretary of State overturned the decision on appeal. At Drakehouse, adjacent to an existing centre, however, when the council proposed to change existing retail permission to food retail, the Secretary of State so disliked the idea that he called in the decision for further review. As the latter site is well served by public transport and adjacent to an existing centre, is it not time the Government turned fine words into practical policies, supported local shopping centres on the ground and stopped undermining them, as Government policy on planning applications appears to do every time?

Sir Paul Beresford: The hon. Gentleman would clearly also have benefited if he had come to the debate to which I referred. He would have recognised that Opposition and Government are both going down the road that he mentioned.

Water Bills

Mrs. Lait: To ask the Secretary of State for the Environment what proposals there are to end the practice of basing water bills on rateable values. [23204]

Mr. Gummer: On 4 April I announced my intention to enable water companies to continue to use rateable values as a basis for charging for water beyond 2000.


However, I believe that the use of rateable values will gradually reduce as customers and water companies alike decide to switch to water meters.

Mrs. Lait: Is my right hon. Friend aware that distortions are emerging in people's water bills due to outdated ratable values? That is compounded by the frustration at the cost of water meters, when electricity and gas meters come free. Is he planning a revaluation of domestic properties?

Mr. Gummer: Late-valued new housing—late-valued before 1989—has always tended to have a higher rateable value than other housing. That distinction has existed for some time. There is nothing new about the problem, which is simply that if we do not continue with that system the only alternative would probably be to allow council tax banding to be used. The hon. Member for Truro (Mr. Taylor), who speaks for the Liberal party, seems to be saying yes to that. However, I have examined the figures from Severn Trent Water and 1.4 million of its non-metered water consumers live in houses in bands A or B; in other words, they are the poorest people. Of those, 900,000 would pay more for their water if we changed the basis to council tax banding. Something like half a million of them would pay 50 per cent. more. That is the Liberal policy to replace rateable values. I think that we should keep rateable value until more and more people acquire meters. Metering must be the sustainable development answer.

Mr. Matthew Taylor: Notwithstanding the Minister's comments, I have seen pensioners in tears because they cannot pay their current water rates, which can be as much as 15 per cent. of their annual income. They cannot afford that. The council tax banding system, on which the Minister elaborated, would allow many such people to benefit if, as with council tax, help were available for people on low incomes and people living alone. That is why the old rating system was ultimately replaced by council tax and the Government did not revert to it after the poll tax. Given that the same problems occur with water rates, the same solution should surely apply.

Mr. Gummer: One of the fascinating things about the hon. Gentleman is that it does not matter what the facts are, he still asks the question that he intended to ask before he heard the facts. The Liberal party must face the facts: if we moved to council tax banding, the people who would be hurt most would be those in the smallest and least taxed houses, many of whom would pay much more. If that is Liberal policy, I am prepared to advertise it widely. Everybody ought to know that the Liberals, having been given the facts, want to make poorer people pay more. That is what they want, and that is what we shall pin them with.
The sensible people in the west country are the Conservative Members who have been pressing the water companies which cover the area to be much more efficient, to ensure that they charge as little as possible and to offer people the alternative of water metering. I hope to see more companies following the example of Southern Water, which has reduced the cost of installing meters. That must be sensible.

Mr. Patrick Thompson: My right hon. Friend will be aware that many of my constituents and other people throughout the country are worried about the cost of

installing a water meter. However, those who have installed meters usually find that there are considerable reductions in their bills. Can my right hon. Friend make those facts more widely known and do more to encourage water metering, which must be right in terms of conservation, especially in times of drought and difficulty?

Mr. Gummer: I am sure that we should consider that idea carefully. In the Anglian region, for example, if we do not opt for a mechanism to restrict the use of water more sensibly, we shall need huge new reservoirs and we shall have to draw down water from half-way across the country—in other words, we shall have to do precisely what any sense of sustainable development would forbid. My hon. Friend is right: I shall look for better ways to advertise the fact to the public and to persuade some of the water companies with high charges for installing meters to change their views.

Mr. Dobson: Why does the Secretary of State permit the water regulator to continue to try to force water metering on companies which are reluctant to introduce it and on householders who are even more reluctant? With about 20 million households in the country, would it not cost between £1 billion and £1.5 billion to meter every house in Britain, and are there not better ways of spending that money to benefit the environment?

Mr. Gummer: First, I cannot tell the water regulator what to do in any circumstances. That is why he is an independent regulator, and I have no intention of changing that. Secondly, no country in the world that is concerned with sustainable development is not having to face the fact that water is a resource which needs to be metered. The hon. Gentleman would be laughed out of any international conference to which anyone was mistaken enough to send him if he suggested that we should turn our backs on sustainable development for water.
The hon. Gentleman has no reputation in the environment world, and one of the reasons for that is that he will not face up to reality. Even if the figure that he gave were true, that amount would be spent over 25, 30 or 40 years. People would be able to conserve water during those years, which is necessary in parts of the country where we are bringing water long distances. We are building large reservoirs, which the Labour party always opposes on the ground that they are against environmental concerns. The hon. Gentleman has no policy on this issue.

Mr. Streeter: Does my right hon. Friend welcome the fact that South West Water has now reduced the cost of installing water meters to below £200? Is that not good news for our constituents in the south west? Will he leave no stone unturned in trying to reduce the general level of water charges in the south west, which remain of great concern to my constituents?

Mr. Gummer: I am pleased that water metering charges have gone down by more than one third, and I note that that was the result of a concerted effort by Conservative Members in the south-west. I hope that South West Water will get the charges down even further, and I am sure that there are ways to do so. I hope that it will also look at ways of helping people to amortise the cost of water meter installation over a reasonably long period so that they can get the benefits immediately.

North Sea Ministerial Conference

Ms Quin: To ask the Secretary of State for the Environment what proposals he will be making at the forthcoming North sea ministerial conference. [23205]

Mr. Gummer: I refer the hon. Member to my earlier reply to the hon. Member for Lewisham, Deptford (Ms Ruddock).

Ms Quin: Has the Secretary of State seen the report in The Observer and the study by the World Wide Fund for Nature which claim that the Government are failing to meet their international commitments concerning the reduction of pollution in the North sea? Can the Secretary of State assure me that by the end of this year, the Government—as they are supposed to do—will have met every one of the targets to which they have agreed for all the substances listed?

Mr. Gummer: We are already in the top third of the North sea countries in meeting our commitments, and we have met 27 of the 36 targets for the reduction of inputs. We are well on the way to meeting the rest of them, including the 75 per cent. target for mercury and the 70 per cent. for cadmium. It is no wonder that David Bellamy has referred to us as the clean man of Europe.

Housing Improvement Grants

Mr. Tony Banks: To ask the Secretary of State for the Environment if he will make more resources available for housing improvement grants. [23206]

Mr. Robert B. Jones: I cannot anticipate the public expenditure round, but local authorities are free to add to renewal allocations from their own resources, particularly where they have gone for a large-scale voluntary transfer.

Mr. Banks: With regard to the Minister's reply to my hon. Friend the Member for Vauxhall (Ms Hoey) on Question 10, had it not been for the Greater London council there would be no Coin street development.
I thank the Minister for his offer this morning to come to Newham to discuss the matter of improvement grants, but may I remind him that my borough has 2,000 homes with outside lavatories and 1,200 without inside bathrooms? My local authority is one of the best at providing improvement grants, but 4,000 households are still waiting for grants. There has been a dramatic fall in the number of mandatory grants, and the Government know that. We are still waiting for their long-term proposals on improvement grants. When can the House expect to hear them?

Mr. Jones: The hon. Gentleman knows that this is a complex subject, but we hope to announce our proposals before too long. He will know that some local authorities underspend their allocations, just as others find themselves running short. We try to use the underspend to help those authorities which have a problem, and I shall be happy to talk to him about Newham. In the hon. Gentleman's own neighbourhood, Redbridge benefited by an extra £613,000 from the reallocation, while Waltham Forest received an extra £185,000. The constituency of the hon. Member for Greenwich (Mr. Raynsford) benefited by an extra £691,000 and—proving that silence is golden—Sandwell benefited by an extra £2 million.

Mr. Jenkin: When my hon. Friend considers such demands for increases in public expenditure, will he remain mindful that it is Government policy to try to reduce public expenditure? Who in his Department is responsible for the fundamental review of public expenditure, and what reductions does he expect his Department to achieve?

Mr. Jones: In our Department, as in all others, all Ministers take an interest in that subject under the leadership of my right hon. Friend the Secretary of State. We recognise, as I am sure my hon. Friend does, that the first duty for the maintenance of their homes lies with owner-occupiers. However, I recognise problems will arise with particular individuals and we must pay attention to those.

Mr. William O'Brien: In considering the grants procedure, will the Minister ensure that the 2.6 million houses in desperate need of attention will be considered in the mandatory grant which, I hope, will be operated taking account of inflation? Will he ensure that the discretionary grant is well funded and ring-fenced so that local authorities have an opportunity to meet the demands made on them by people living in sub-standard properties?

Mr. Jones: I have told the hon. Gentleman before that we have not reached a conclusion about the future regime. His opinions, however, seem to be far removed from the vast majority of Labour-controlled authorities that I have met throughout the country, which want to get away from a mandatory scheme so that they can concentrate their renewal strategy where it is most needed. Even with the present arrangements, however, the reallocation benefit of the underspend to the hon. Gentleman's authority of Wakefield was nearly £500,000.

Open Spaces

Mr. Harry Greenway: To ask the Secretary of State for the Environment what steps he is taking to ensure the provision of more open spaces in built-up areas; and if he will make a statement. [23207]

Sir Paul Beresford: We fully recognise the importance of open space for amenity and recreation, and our planning policy guidance encourages its provision.

Mr. Greenway: I thank my hon. Friend for that reply. Will he be strong with Labour councils such as Ealing, particularly as an open space and sporting facility which has existed for nearly 100 years is under threat? Does he agree that such a facility should continue to exist and not be built on in any way?

Sir Paul Beresford: As my hon. Friend is aware, we are "strong" on exactly that issue. Playing fields should normally be protected, except where additional sports facilities are provided for the area, where there is alternative provision of equivalent benefit elsewhere, or where there is an excess of sports provision—which would be rare or non-existent in my hon. Friend's area.

Mr. Dobson: As one who has always strongly supported the provision of more open spaces in urban areas, may I tell the Minister that all decisions by the Labour council about the disposal of sites in Ealing simply reflect previous decisions by the former Tory council, which disposed of many more sites? Does the hon. Member for Ealing, North (Mr. Greenway) accept that we welcome his raising that matter as councils throughout the country are strapped for cash and find themselves having to sell off sites? Even more important, the remaining open spaces are becoming increasingly run down, shabby, ill kept and—because they are no longer staffed—insecure. More resources are needed to stop the sell-offs and improve the condition of open spaces.

Sir Paul Beresford: rose—

Mr. Greenway: On a point of order, Madam Speaker. A question has been put to me by the hon. Member for Holborn and St. Pancras (Mr. Dobson). May I answer it?

Madam Speaker: Order. The hon. Gentleman has been long enough in this House to know that the answer is no.

Sir Paul Beresford: I am continually amazed at Labour Members' lack of knowledge and understanding of inner cities and local councils. One need only go to some Labour authorities to see land requiring regeneration which is wasted because the local authorities do not have the money, gumption, ability, information or imagination to get any regeneration moving.

Thames (Salmon)

Mr. Duncan: To ask the Secretary of State for the Environment what research has been presented to his Department about the number of salmon in the Thames. [23209]

Sir Paul Beresford: I understand that the National Rivers Authority recorded 238 salmon in the river in 1994, confirming the marked improvements achieved in recent years. The actual number of salmon returning to the river in that year is likely to have been greater.

Mr. Duncan: Is my hon. Friend aware that in days gone by sittings of the House were suspended because of the stink from the Thames in summer? Do not the increased numbers of salmon swimming up a clean river to spawn prove beyond doubt that the Thames can rightfully claim to be the cleanest metropolitan river in Europe?

Sir Paul Beresford: As ever, my hon. Friend is absolutely right. He may be interested to know that in the past five years the average annual return of salmon to the Thames has been 214. The actual number has tended to vary quite significantly year by year, the highest number recorded being 338 in 1993 and the lowest number being 59 in 1991. My hon. Friend is absolutely correct: the Government's success in cleaning up the rivers, and particularly the Thames, is proved by the fact that he and I can risk opening a window in Committee.

Points of Order

Several hon. Members: rose—

Madam Speaker: Wait a moment. I have a point of order from the hon. Member for Dewsbury (Mrs. Taylor).

Mrs. Ann Taylor: On a point of order, Madam Speaker. May I seek your guidance on what action should be taken by the House on the fact that the hon. Member for Weston-super-Mare (Sir J. Wiggin) used the name of the hon. Member for Falmouth and Camborne (Mr. Coe) to table an amendment to the Gas Bill? Even more important than that is the fact that the hon. Member for Weston-super-Mare may have done that to avoid drawing attention to the fact that the amendment related to his financial interests. From what the hon. Gentleman has said, the Committee sitting may not be the only occasion on which that happened.
The House has taken action against the hon. Members who took cash for questions, but it now appears that we need to investigate the issue of cash for amendments, because any such action is clearly in breach of the existing rules in "Erskine May".
I appreciate that you, Madam Speaker, may not be able to rule fully on the matter yet, but you will be aware of the growing expectation that the matter may have to be resolved by a reference to the Committee of Privileges, as the Prime Minister indicated this morning. The House would be grateful if you could say how best we should now proceed.

Madam Speaker: I already have a letter alleging breach of privilege in this matter. The House knows that the hon. Member for Weston-super-Mare (Sir J. Wiggin) is not in the country at the moment. In spite of that, I am seriously examining the situation and I shall do so with all speed.

Mr. Peter Hain: On a point of order, Madam Speaker. I wonder whether you can advise me what protection I have against the allegations of the hon. Member for Rutland and Melton (Mr. Duncan)—I have given him advance notice of this point of order—made in my presence despite my repeated denials, that I collaborated with the "Dispatches" programme and The Guardian over this matter. I emphatically deny that allegation: I had no contact with either during the sittings on the Gas Bill. I put it to you, Madam Speaker, that that allegation is an attempt to produce a smokescreen and to divert attention from the gross abuse of the House's procedures by the cash for amendments scandal that has developed.

Madam Speaker: Does the hon. Member for Rutland and Melton (Mr. Duncan) wish to respond?

Mr. Alan Duncan: I am grateful for the opportunity to do so. Through you, Madam Speaker, I invite the hon. Member for Neath (Mr. Hain) to celebrate the near anniversary of his first apology to the House by apologising now to me for saying things about me in the Standing Committee which he knew to be untrue, in the knowledge that he could take advantage

of qualified parliamentary privilege and in the knowledge that those comments would be broadcast afterwards with no recourse on my part.

Madam Speaker: I cannot deal, across the Floor of the House, with personal grievances between hon. Members. They ought to be resolved between those hon. Members, rather than being raised on the Floor of the House. It is a disgrace that they are brought to me in this way.

Mr. Tony Benn: On a point of order, Madam Speaker. When you come to consider the ruling that you make on the matter that has been raised, may I invite you to think carefully about it? Your ruling may have historic importance, and may be studied over many centuries. We are not merely discussing the possible conduct of an individual Member of Parliament, which is normally dealt with by a secret meeting of the Committee of Privileges and a minor suspension and then left; I put it to you, Madam Speaker, that we are discussing a new challenge to the authority of the House.
Your predecessor, Madam Speaker, dealt with the King when he tried to interfere. I believe that commercial interests are now trying to dominate the House of Commons by other means. There are 14 pages of offices that are disqualified from service in Parliament—including that of Steward and Bailiff of the Chiltern Hundreds—on the ground that they might be under the control of the King: the mere fact that they are royal appointments excludes them.
When you give your ruling, Madam Speaker, it should go beyond the conduct of the individual Member of Parliament and begin to open up matters of much deeper importance that it is not appropriate for the Nolan committee to consider, because it is not answerable to the House. It is for the House, and only for the House, to legislate to deal with any abuses that may arise.

Madam Speaker: I take what the right hon. Gentleman has said very seriously.

Mr. Roger Gale: On a point of order, Madam Speaker. I have no desire to become embroiled in a personal row between my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and the hon. Member for Neath (Mr. Hain). However—

Madam Speaker: Order. I have given my ruling, and I will have no more of this across the Floor of the House. If the hon. Gentleman wishes to raise a different point of order, I will hear it; but there must be no references to points of order that have already been made.

Mr. Gale: With respect, Madam Speaker, one of your duties as Speaker of the House—

Madam Speaker: Order. I am well aware of my duties in the House. I will give the hon. Gentleman every chance: let me repeat that, if he has a genuine point of order on another matter, he may raise it, but he must not raise again issues on which I have already given a ruling.

Mr. Gale: Will you use your influence, Madam Speaker, to prevent hon. Members from using parliamentary privilege to smear the reputations of other hon. Members?

Madam Speaker: I believe that hon. Members should be sufficiently mature to conduct their business in a proper and decent way, and that the Speaker should not have to intervene in altercations between Back Benchers.

Mr. David Winnick: On a point of order, Madam Speaker. I wish to raise a separate matter from that raised by my hon. Friend the Member for Neath (Mr. Hain). I hope that you will appreciate that it does not relate to a specific case.
What concerns me—and, obviously, must concern you, Madam Speaker—is the reputation of Parliament as a whole. I emphasise that I am not referring to a particular case. I am concerned about the impression that is created—understandably—that this Parliament is hopelessly sleaze-ridden. Is there any way in which we can demonstrate that many of us—many Opposition Members, certainly—have no outside financial interests? Is it not important for people to recognise that we are not all on the make? We are not all acting as consultants, lobbyists and so forth.

Madam Speaker: That is barely a point of order for me, but I am sure that it will be not only touched on but, perhaps, developed during Thursday's debate.

Mr. Paul Flynn: On a point of order, Madam Speaker. May I raise an entirely different matter—what appears to be the manipulation of Question Time for party political advantage? There have been two examples.
You will recall, Madam Speaker, that in his answer to Question 15 this afternoon the Secretary of State for the Environment gave no information, referring my hon. Friend the Member for Gateshead, East (Ms Quin) to the answer that he gave my hon. Friend the Member for Lewisham, Deptford (Ms Ruddock) in response to Question 3. We should ask why those questions were not linked.
Questions to the Church Commissioners are allotted only five minutes, and normally only two or three questions are answered. That was the case on Monday: only three questions were answered. The Department linked Question 1 with Question 4, and Question 3 was not put to the House. It so happened that Question 4 was put by a Conservative Member. When Ministers link questions they say, "With permission, Madam Speaker", so I presume that it is a matter for you, Madam Speaker. Can you ensure that such linking is not used to silence hon. Members' questions?

Madam Speaker: I am sure that the House is well aware that I do not give permission for the linking of questions. It is nothing to do with me and it is up to the Minister involved to decide whether questions are linked. I am sure that those on the Government Front Bench have noted what the hon. Gentleman has had to say.

Mr. Jeremy Corbyn: On a point of order, Madam Speaker. On an entirely different matter—have you received a request from a Defence Minister to come to the House and make a statement on the raid that took place earlier today on the offices of Greenpeace? The raid took place on an application to the court from the Ministry of Defence after the non-proliferation treaty had

been completed in order not to draw attention to the fact that Greenpeace has been campaigning vigorously for nuclear disarmament and states that the Trident nuclear missile system is itself a proliferation.

Madam Speaker: If a statement were being made today, we should all have known about it by 1 o'clock as it would have been shown on the annunciator screens.

Mr. Tony Banks: On a point of order, Madam Speaker. It arises out of the point of order raised by my hon. Friend the Member for Newport, West (Mr. Flynn)—

Madam Speaker: Order. There can be no other point of order. I do not give permission for the linking of questions—that is done by Ministers. If the hon. Gentleman has a new point of order, of course I must hear it.

Mr. Banks: It is.

Madam Speaker: In that case, the hon. Gentleman should not have stated that it was related to a previous point of order.

Mr. Banks: Madam Speaker, I want further clarification on a matter on which I want you to give a ruling. As permission is sought, if an hon. Member shouts "Object", is it true that the Minister cannot link the questions?

Madam Speaker: That is not the case. Ministers have got into the habit over many years—long before I became Speaker—of saying, "With permission". They do so when they link questions and when they make statements, but they do not require my permission to do so. Perhaps we can leave it at that and get on with the ten-minute Bill.

Mr. Roger Knapman: On a point of order, Madam Speaker. It is probably true that members of the Labour party are safe from allegations of sleaze, because who on earth would employ them outside this place?

Madam Speaker: Order. If the hon. Gentleman has a point of order, I want to hear it straight away.

Mr. Knapman: The hon. Member for Neath (Mr. Hain) has twice in the past 12 months made allegations of sleaze and has rightly had to come before the House to grovel and apologise to you, Madam Speaker. How many times can an hon. Member do that? If the hon. Gentleman has already had to come before the House twice, having made misleading allegations, should he be allowed to do it yet again this afternoon?

Madam Speaker: I hope very much that hon. Members will bear in mind what I have said today and take it seriously.

Several hon. Members: rose—

Madam Speaker: I am taking no further points of order. The electorate and the British public outside the House expect better behaviour and better conduct from the House. It is about time that every Member of the House realised what is expected of us and behaved accordingly. We must now proceed to the ten-minute Bill and I shall take no further points of order from anyone today.

Commonhold

Mr. Dudley Fishburn: I begto move,
That leave be given to bring in a Bill to introduce a system of commonhold property tenure; and for connected purposes.
The Bill involves a new form of land tenure that will allow flat-dwellers to own their individual flats on a freehold rather than a leasehold basis. It will allow new buildings, whether commercial or residential, to bypass the leasehold system—properties could be sold as commonholds from the outset, with the new law spelling out the obligations and rights of each unit in relation to the whole.
There is nothing controversial in the proposal, which will merely bring to England and Wales a form of tenure available in every other western country—the condominium of the United States, the "strata" title of Australian flats and the system of co-propriété used throughout the continent. Millions of flat-dwellers live under that system throughout the world—some in Scotland, but none in England or Wales, where leasehold has, until now, been the only law recognised in the land for those sharing a common building.
The fact that this country has, extraordinarily, been without such a system has long worried both flat-dwellers and the property industry. At the moment, many thousands of people who own both a leasehold and a share in the underlying freehold—one of the attendants in the House is in exactly that position—have no alternative but to operate both systems in parallel. Under my proposals, that attendant would, with his neighbours, be able to adopt a commonhold tenure that would free him from those complications. It would also increase the value and the marketability of his flat. Most importantly, it would give him exactly the same tenure as for every commonhold flat in the country. Gone would be the endless variations and small print of leasehold; instead he would have full ownership of a property in which all his obligations and rights were spelt out—and spelt out in terms identical to all commonhold flats.
Changes in the property market sparked in part, but only in part, by the Leasehold Reform, Housing and Urban Development Act 1993, have led to a large increase in the number of people who own both a leasehold and a share of the underlying freehold. Many owners of residual freeholds realise that the best thing to do these days is to sell their freehold back to the leaseholders who own the major stake in the building. Yet those people are saddled with a highly complicated form of ownership, having to run a separate freehold company to administer the running of the building.
The leasehold reform Act raised many passions. In 1992 I was made radical of the year for pushing that legislation to the fore through a number of ten-minute Bills and debates, although much of the credit rested with my predecessor, the late Brandon Rhys Williams.
This legislation is more likely to earn me the title—much more difficult to attain because of the greater competition—of bore of the year because no one could possibly oppose it. The commonhold proposal has been penned in part by the Grosvenor Estate. You may recall, Madam Speaker, that the Duke of Westminster left the Conservative party in high dudgeon because of the leasehold reform Bill. Commonhold may bring him

back—I hope so. It has the support of the building societies' Council of Mortgage Lenders, which sees at first hand the problems of lending money to purchase flats on the complicated leasehold-freehold system. It also has the support of the Consumers Association and the Law Commission, which first produced a working commonhold paper in 1987. A new slimline commonhold proposal is now in near final draft.
The sponsors of my Bill include many Members of Parliament from inner London constituencies who know the need for this new form of tenure well enough—for example, my right hon. Friends the Members for City of London and Westminster, South (Mr. Brooke) and for Chelsea (Sir N. Scott) and my hon. Friend the Member for Fulham (Mr. Carrington). They also include Members of Parliament who were vocal in their opposition to leasehold reform. They spoke out against the leasehold Bill because they believed that it was retrospective legislation which involved compulsory purchase and confiscation.
Critical as those hon. Members were of me then, they are happy to sponsor this Bill on the issue of commonhold. They recognise that commonhold is a voluntary system which is overdue in coming to the statute book and which contains no element of confiscation. I welcome the support of my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling), who was once an opponent but who is now an ally in this matter.
Things move slowly in matters of property law. On 12 July 1991 the Government announced that they would bring a system of commonhold before the House based on the 1987 Law Commission report, the 1988 draft legislation and the 1990 consultation paper that produced more than 1,000 replies. It was promised too in the Conservative party manifesto—I know, because I wrote the phrase. But nothing happened. When the leasehold Bill was announced, commonhold was left out. Why? It is because the leasehold Bill came from the Department of the Environment, while commonhold comes from the Lord Chancellor's Department—it seems that Whitehall Department shall not talk unto Whitehall Department.
Throughout the passage of the leasehold Bill, Opposition Front-Bench spokesmen criticised the Government for not introducing commonhold. I am pleased that the hon. Member for Greenwich (Mr. Raynsford), who is a Labour Front-Bench spokesman on housing, is a sponsor of my Bill. Yet the urban dweller waits while so much common agreement produces so little common action. Here is a Bill that is tailor-made for an uncontroversial Queen's Speech; there need be no Division on Second Reading. It could fit excellently into the Jellicoe procedure, by which uncontroversial Bills dealing with legal matters begin in another place.
Commonhold would be entirely voluntary. That is essential. It would be available for those who wished to use it as an alternative form of tenure. If it worked—and it would—it would gradually replace large chunks of leasehold. By gradually, I mean over a generation. A commonhold flat would become London's standard form of ownership. Good tenure would drive out bad.
A commonhold property would soon hold a premium over a leasehold property. The market would do with an invisible hand what politicians failed to do with a big stick.
Most countries recognised a generation ago the need for commonhold as a proper form of land tenure in a modern city. I hope that this modest ten-minute Bill will help bring my proposals to the statute book.
Question put and agreed to.
Bill ordered to be brought in by Mr. Dudley Fishburn, Mr. Peter Brooke, Mr. Michael Jopling, Sir Nicholas Scott, Mr. Matthew Carrington, Mr. Nigel Forman, Mr. Henry Bellingham, Mr. Gyles Brandreth and Mr. Nick Raynsford.

COMMONHOLD

Mr. Dudley Fishburn accordingly presented a Bill to introduce a system of commonhold property tenure; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 14 July and to be printed. [Bill 124.]

Opposition Day

[12TH ALLOTTED DAY]

Rail Services

Madam Speaker: Before we move on to rail services under privatisation, I should inform the House that I have selected the amendment standing in the name of the Prime Minister.

Mr. Michael Meacher: I beg to move,
That this House, noting that the threat of rail privatisation is leading to a blight of investment, lowered reliability and punctuality of services, and higher public subsidies to private operators, calls on the Government to improve and increase investment in a publicly owned and publicly accountable rail system which best serves the public interest and the needs of the British economy.
Since 1992, when the Government introduced their rail privatisation proposals, virtually every index of rail performance has shown a sharp decline. The most dramatic and damaging in its long-term effects is the fall in investment. According to the Government's own figures, in 1992, investment in the existing rail network, excluding the channel tunnel, stood at £1,060 million at today's prices. This year, it is expected to be about £490 million. That is a staggering cut of 54 per cent. in three years.
The meaning of the halving of rail investment to below £500 million in the present year is revealed by the fact that Sir Bob Reid, the former chairman of British Rail, recently said:
To keep the railway in a good steady state we need to be spending in the region of £900 million to £1 billion a year.
To fall below that bottom line for several years running is an obvious false economy. To halve the amount is surely irresponsible and dangerous.
The consequence has been a decline on the railways that is unprecedented for 50 years. Last year, for the first time since the war, there were no orders for new rolling stock. That seems bound to continue this year because of the uncertainties over privatisation. No new signalling or electrification projects were ordered in the two years to April 1994 and Railtrack has placed only one significant contract since being set up that month.
The value of rolling stock orders completed has plummeted by half in the past two years, while signalling turnover has fallen by one third.

Mr. Patrick McLoughlin: Will the hon. Gentleman give way?

Mr. Meacher: I shall give way in a moment, but I want to make one or two points first.
Routine track renewal of £200 million a year is necessary to maintain its condition, yet track renewal has now slowed to such an extent that engineers must assume that rails have a working life of 90 years, which is far beyond what is either realistic or safe. Thank God there has been no really serious accident yet. But I believe that that is much more by luck than by judgment.

Mr. McLoughlin: A few minutes ago the hon. Gentleman quoted Sir Bob Reid's estimate of £900 million. Is he saying that if he was Secretary of State for


Transport, he would always do what the chairman of a nationalised industry requested? Is he now committing himself to spending an extra £400 million or £500 million a year on the railways?

Mr. Meacher: That is a rather silly point. It is not a matter of doing what the chairman of British Rail says; it is a matter of doing what is sensible. Any reasonable Government would listen to what a chairman of British Rail, whom they appointed, said. To produce an investment record scarcely better than half of what he believes to be the minimum necessary simply to maintain a good steady state is an utter condemnation of the Government's rail investment policy, in which I hope the hon. Gentleman will join.

Dr. Robert Spink: Will the hon. Gentleman give way?

Mr. Meacher: No, I want to make a little progress.
Altogether, it has been estimated that British Rail now has more than 2,500 carriages and locomotives that need replacing in the near future. Yet no orders are being placed. In the Kent Coast fleet, 475 carriages are more than 40 years old—as the long-suffering Kent commuters know only too well—well beyond their maximum working life. Yet the Government prefer to allow ABB at York to go into liquidation at a cost of 750 jobs rather than bring forward even a limited follow-on order. That is the state of Britain's railways today under this policy.
The result of all that has been that service quality has gone through the floor. In the past year alone, 20,000 trains were cancelled—that is more than 80 a day on average. Overcrowding on commuter lines in the south-east is now so acute that the number of standing passengers on slam-door trains is up to three times the number recommended by the Hidden committee after the Clapham train disaster.
In the past year since British Rail was reorganised for privatisation, delays have soared. Of 102 train service groups covering punctuality and reliability, in the past year two thirds did worse than in the previous year. I shall not detain the House by going into more detail, but those examples are typical of the drift, muddle, make-do and breakdown that is now occurring across the rail network.
It is not as if the Secretary of State has not had personal experience of that himself. I understand that last month he went by train to Leeds, and I take up the story as it was lovingly recorded in one of the newspapers.
Chuff chuff chuff, until just outside Leeds, when the train stopped with a groan. Points problems, the customers were told. Dr. Mawhinney got out at Leeds, where he cut short the greetings from assorted local management with a sharpish demand to know what had happened to the points and how long there had been problems. The senior British Rail man dropped his kid gloves too: 'It's because of lack of investment, Minister.'

Mr. Gyles Brandreth: Will the hon. Gentleman give way on that very point?

Mr. Meacher: I shall be very surprised if it is on that very point, but let us see.

Mr. Brandreth: It is on that very point. Obviously, the hon. Gentleman is painting something of a caricature. It certainly does not reflect the line between London and Chester. The hon. Gentleman is a good 10 minutes into his speech, painting a dismal picture, but he has said nothing about the level of investment that he would settle

on or whether he has plans to renationalise. Will he give us some answers as well as telling us how terrible it all appears from his perspective? What are his specific solutions? What should the level of investment be? What are the plans for renationalisation?

Mr. Meacher: I well understand the hon. Gentleman's anxiety to leave the subject of the debate. I remind him that the debate is about the further erosion of rail services due to privatisation. That is what we are debating, and that is exactly what I have described.
If the hon. Gentleman wishes to know the Labour party's policy, I shall say something about that before I conclude. However, I can put him out of his misery by saying three things. First, we would substantially increase investment in rail to make up for the huge decline in investment that has taken place for years under the policy of Conservative Governments. Secondly, we believe that rail has a very significant role to play in an overall transport policy. Thirdly, we do not have the visceral hostility to the public sector that emerges from every speech that the Secretary of State and his hon. Friends make.

Mr. Gary Streeter: Will the hon. Gentleman gave way?

Mr. Meacher: No, I will not.

Mr. James Clappison: Will the hon. Gentleman give way?

Mr. Meacher: No, I will not. I want to make a few more arguments in my own speech.
Perhaps the best illustration of the great Mawhinney railway revolution is that it appears that damaged trains are now taken for repair by road. ScotRail, for example, found that it would cost £20,000 to £30,000 per train to take two flood-damaged trains from Glasgow to ABB's Derby workshops by lorry, but that renting a special towing locomotive and paying Railtrack's extra charges for using lines between the Scottish border and the midlands would be as much as 20 per cent. more expensive. I hardly need tell the House that, under the old British Rail network, the cost of moving trains by rail would have been absorbed; it would have been at marginal cost in the system.
When I read that in The Daily Telegraph—which of course the Secretary of State was reading on his way to Leeds—I congratulated him on giving a new twist to the privatisation saga. None of us had realised that he meant that, under his privatisation proposals, trains would in future travel by private lorry. Things have descended to that farcical level because the privatisation process is pitted with tensions and inconsistencies that cannot be resolved, and there is no leadership from the centre to stop the rot.
The Secretary of State excels as the weather vane Secretary of State; the invisible man of policy. He is the general who has been put in to sound the retreat—not to create a transport policy, but to withdraw from every trace of it. He is the man who has abandoned the M25 widening, who has dropped motorway tolling and who has rejected congestion pricing, but who has produced nothing recognisable as a roads policy. He is the man who kicked into touch the runway capacity in the south-east report on airport development and who put off action on ferry safety until the next decade.
The Secretary of State is the man who dropped the reduction in through-ticketing stations like a hot brick when the political row became too great for him. He is the man who was prepared to sell ABB down the river and withdraw from Ministers' repeated commitments to a £500 million modernisation programme for the Kent Coast rail fleet. He is the man who scuppered his predecessors' promises to bring in automatic train protection.
The Secretary of State is the man who, after the then Minister of State, the right hon. Member for Kettering (Mr. Freeman), said in January 1993:
There must be no hiatus in railway investment during a transition to a franchised railway",
has presided over the deepest and longest investment blight in modern railway history. There was no problem about getting rid of all the embarrassing baggage of Tory transport policy; there was just a vacuum where policy should be.

Mr. Streeter: Will the hon. Gentleman give way?

Mr. Meacher: I take it that it is about the arguments that I have made.

Mr. Streeter: Yes. I am grateful to the hon. Gentleman for giving way. He has now met his sound bite quota for the day in full, but the House really wants to know, would the Labour party renationalise British Rail—yes or no?

Mr. Henry McLeish: The Government have not privatised anything yet.

Mr. Meacher: As my hon. Friend says, the first question, which is an interesting one, is whether the Government will succeed in privatising anything. Apart from a ballast quarry in Devon or somewhere, I do not think that they have succeeded in privatising anything so far. For reasons that I shall give later, I would be surprised if they succeeded in privatising more than a small part of the system. If and when they do so, we shall make it clear how we shall deal with it and how we shall return to a publicly owned and accountable rail system.
In all this anxiety to scuttle, the alleged goals of privatisation have all been stampeded under foot. The Secretary of State has often proclaimed that one of the objectives is to reduce public subsidies to the rail system.

The Secretary of State for Transport (Dr. Brian Mawhinney): That is not true.

Mr. Meacher: I am sure that the right hon. Gentleman is on record as saying that one of the results will be that subsidies will be reduced and that the system will be more dependent on the market. It is now clear, however, that public subsidies will be massively increased. Not only has the public service grant been nearly doubled to £1.7 billion a year to pay for track access charges to Railtrack—money that is intended, as public subsidy, to go eventually to Railtrack shareholders—but a public subsidy of at least £330 million to £500 million a year will have to be paid to private train operators to compensate them for their loss of revenue under the cap and to pay for their profits.
It is becoming clear that, far from the market operating unfettered, privatisation will mean a huge enlargement of public subsidies to private operators in the biggest market-rigging operation in modern rail history. Even that is without the £1.4 billion write-off of Railtrack debts as a sweetener for investors, as has happened with every other privatisation before this one.

Dr. Mawhinney: The hon. Gentleman has quoted a number of figures this week. He started out on Monday with £1 billion. He seems to have moved a little since then. For our better understanding, will he explain how he calculated those figures?

Mr. Meacher: Perhaps I could do a deal with the Secretary of State. If he will tell me what his figures are, I shall be pleased to tell him how we reach our figures. If that is a deal, let me start by saying that we calculated them on a clear basis. In the past, I think, 10 years, under Government edict revenue to British Rail has increased every year by a figure of between 2 and 3 per cent. above inflation. Train operators will lose that revenue under the rail fares cap. In addition, if they are going to buy those investments, they will expect what perhaps I could delicately call a decent profit. I suspect that the going rate in the City is about 10 to 15 per cent. If one calculates both those figures on the basis of fares revenue across the rail network, there will be a need for a subsidy of between at least £330 million and up to £500 million. Those are tight figures, so there may be a need for more to finance the franchisees if they are to make a bid.
Now that I have clearly told the Secretary of State how we reached those figures—I shall be pleased to set them out mathematically for him if he wishes—perhaps he can now tell us what his figure is for the extra public subsidy that will be required as a result of his policy, announced on Monday, for a rail fares cap. I would be pleased to give way to him. He asked me what my figures were and how they were calculated. I have told him. Perhaps he can now tell the House what his figures are. [Hon. Members: "Come on."] The right hon. Gentleman is remarkably coy. In the past two or three days, I have listened to him around the circuit and this is the first time that he seems to be frightened to jump to his feet. I am doing my best to help him. I shall give him another chance. Does he think that the amount will be more or less than £500 million a year? Will he tell us just that?
I am not sure whether the right hon. Gentleman is glued to his seat, but he seems to be thinking very deeply. The Department of Transport did not have a figure when the policy was announced on Monday and it seems clear from the uncharacteristic silence of the Secretary of State that it still does not have a figure. It seems remarkable that he can announce a policy without having a figure.
We know that the Government were in enormous confusion about the policy because it was due to be announced on Friday. The Secretary of State wanted to exclude supersavers and Apex tickets, but the Prime Minister wanted them all to be included. That is why there was a delay until Monday. It still seems that there is no certainty about what the policy will cost.
I am offering the Secretary of State one last chance to come clean. If I am wrong about how this political hotch-potch was achieved, perhaps he will put me right. His silence is significant.

Mr. Peter Snape: To be fair, perhaps my hon. Friend is addressing that question to the wrong person. The intellectual justification for the rail privatisation exercise is being driven by the Secretary of State's parliamentary private secretary, the hon. Member for Hayes and Harlington (Mr. Dicks), who is sitting behind him.

Mr. Meacher: If the Secretary of State is the ventriloquist's dummy, it explains his silence.
The Secretary of State's second claim is that, even if the passenger service requirements are 20 to 30 per cent. below the level of current timetables, commercial operators will have a strong incentive to improve on the cutbacks. That is the line that he has taken regularly. It is no wonder that he has been tipped as the next Tory party chairman if, as we saw yesterday, he is prepared to allow major cuts on the London to Peterborough line on the basis of that arrangement. I admire either his folly or his courage—I am not sure which.
The truth is that private operators will have neither the incentive nor the resources to improve on the passenger service requirements allowed them because the fares cap will squeeze their revenues and, as we learnt today, because franchise holders will have to put up 15 per cent. of their expected turnover as a guarantee against financial failure. That will tie up a further £500 million across the network.
Perhaps the best comment on the Secretary of State's fantasy comes from James Sherwood, who has expressed a specific interest in purchasing the franchise for South West Trains. He said:
There will be no incentive for the franchisee to invest or maintain standards. His only incentive will be to provide the minimum service which the Franchising Director will tolerate and thus squeeze every penny of profit out of a deteriorating asset base.
That is not a comment from the Labour party spokesman. James Sherwood is a hard-nosed operator if ever there was one and it shows what idle fantasy the Secretary of State has been talking.
The Secretary of State's third claim, which he has repeated endlessly in the media in the past couple of days, is that fewer subsidies will be needed because if fares are lowered, more people will travel on the trains. That is wrong on two counts. First, as the Secretary of State must surely know—he must at least have been briefed—the elasticities simply do not work like that. If one knocks a pound off the fare, one gets back only about 60p in the increased number of passengers attracted. The retail prices index minus 1 per cent. formula will lose revenue, not raise it.
Secondly, the right hon. Gentleman has been saying that there is more than enough subsidy in the system already because the Government have substantially increased the public service grant to about £1.7 billion a year. The Secretary of State has not told us that a third of that—about £600 million—has to be repaid each year under the Treasury rules by British Rail and Railtrack as an external financing limit contribution to the Treasury. The remaining £1.1 billion is more than taken up with having to meet track access charges and train-leasing costs, as well as the reimbursement for social lines being

kept open. So there is not enough subsidy in the system already. Indeed, more—I would say a great deal more—will be needed.
The right hon. Gentleman's fourth claim is that, even if the passenger service requirements are lower than the present timetable—and they are by an average of 20 per cent. to 30 per cent., but by up to 50 per cent. on some lines—at least that lower level of service is guaranteed. In an earlier debate, I remember the right hon. Gentleman straying from the main point by reiterating that that guarantee was an innovation, but it is not true.
The Office of Passenger Rail Franchising document entitled "Passenger Service Requirements: An Explanatory Note" states:
If, at any point in future, the Franchising Director's budget were to be reduced to a level which was not sufficient to meet the support commitments contained within Franchise Agreements, then the Franchising Director would need to use this changed procedure to negotiate new passenger service requirements which reflected the reduced amount of money available to support them.
In other words, far from being guaranteed, those services are distinctly tenuous because they are entirely dependent on the vagaries of Government budgeting. Indeed, there is no absolute guarantee that there will be a train service at all.
My final quotation comes from Sir Bob Reid, the former chairman of British Rail. In a recent interview he said:
It would be quite possible for the franchise director to ensure that if an operator wanted to close a line, it would have to run buses instead.
That is a pretty interesting observation. It may, I suppose, be incorrect and I should be glad if the Secretary of State could give an assurance that, if a line was closed, the franchising director could not turn it over to a bus service. Most of us had previously considered such a notion impossible.
The problem is not only the somewhat mystical nature—if I can politely call it that—of the right hon. Gentleman's claims or even the way he makes them, but the manner in which he clings to ideas and statements that he knows to be untrue. The whole idea of rail privatisation is now so universally detested across the country that the only way he could think of to give it a facelift was to link it to a cap on fares. However, he knows that the fares cap has nothing whatever to do with the logic of privatisation and everything to do with trying to buy cheap popularity for a failing cause.
The Secretary of State knows perfectly well that it was the Government's policy to allow rail fares to rise by 22 per cent. above inflation in the past 10 years. Indeed, the hypocrisy of the right hon. Gentleman now trying to claim that he believes in low fares is revealed by the way in which the Government moved heaven and earth to break the Greater London council's "Fares Fair" policy, which was based on exactly that principle and by the way in which they destroyed the South Yorkshire passenger transport executive's cheap fare policy in the same period, even threatening the withdrawal of the £8 million transport supplementary grant to force it to give up the subsidy. Only this Secretary of State and his accomplice, the Prime Minister, would have the brass neck to appropriate as a sweetener a subsidy regime that they have spent the past 10 years contemptuously and vigorously repudiating.
Finally, it is touching, even if also rather pathetic, that the right hon. Gentleman continues to cling to the notion that he will privatise 51 per cent. of the train-operating companies and Railtrack by April next year. It is now clear beyond doubt that he cannot and will not, and that the flagship target of rail privatisation is doomed. I say that for the following reasons. Final bids for the first three lines, accounting for some 20 per cent. of turnover, will not be in until the autumn and even an accelerated assessment period will certainly take until January or February next year at the earliest. Bids for the next four lines, accounting for another 25 per cent., will be at least two months behind. That is the quickest that it could be done. The right hon. Gentleman cannot pass the 51 per cent. target within that time limit, and all hope of doing so—I have to tell him and he must know himself—has disappeared.
Earlier talk by the Secretary of State of letting a contract for design and build in mid-1995 for the west coast main line has now vanished and Railtrack has shifted its interest into a new signalling and train control centre instead. Who will really want to buy into Railtrack if at least a majority of private train operators are not in place? It will be extremely difficult to achieve the flotation of Railtrack by that date. Indeed, I believe that it is clear that it is now impossible.

Mr. Eric Martlew: With regard to the west coast main line, is my hon. Friend aware that yesterday the Office of Passenger Rail Franchising released statistics on the subsidies to be given to sleeper services? I understand that the situation concerning Fort William is sub judice, so I shall not comment on it. The subsidy for Edinburgh is £79 per passenger, for Aberdeen it is £69 and for Inverness it is £140. I agree with those subsidies and I am pleased that those services will continue. But the subsidy for Carlisle is only £38. Is it right that ScotRail has been vindictively—

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. The hon. Member knows full well that interventions have to be brief and to the point. That was a mini-speech.

Mr. Meacher: My hon. Friend makes a very clear point, which the Secretary of State should consider. I hope that either the right hon. Gentleman or the Minister who makes the winding-up speech will answer that question seriously. We are very concerned, not only about the impact of the decision in the Scottish courts, but because a number of other sleeper services, which we are determined should continue, have been allocated lower rates of subsidy.
With the collapse of the April 1996 deadline, the privatisation project is in very deep trouble. Despite bribes to senior management, there is almost nobody who now believes that privatisation is either desirable or practicable. Already 88 per cent. of the electorate are against it, which leaves even a majority of Conservatives opposed to it and only, I suppose, hard-core Thatcherites still in favour. The Secretary of State—I give him credit for this—has had the courage to drop every other millstone of the Government's transport policy. It is now time that he drops this one.

The Secretary of State for Transport (Dr. Brian Mawhinney): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
applauds the record levels of investment in the railways in recent years, including more than £6 billion over the last five years; notes that since nationalisation, despite investment of more than £54 billion in the railways, the proportion of travel undertaken by train has steadily decreased; believes that the railways will be better placed to offer an improved service in the private sector; welcomes recent announcements by the Franchising Director, which represent significant milestones on the path to a privatised railway; supports the new rail fares regime, which will see ticket prices regulated on every line in the country and will produce real fare reductions; believes that the Franchising Director's announcement struck a proper balance between the interests of the passenger and train operators; and condemns the continued failure of Her Majesty's Opposition to offer any policy to stem the relative decline in railway use.".
I listened to the hon. Member for Oldham, West (Mr. Meacher) with interest. This is the third debate in our series and so far the Labour party is batting two-nil down. I must tell the hon. Gentleman that, having listened to his speech, the Labour party is going to be three-nil down.
The hon. Member for Oldham, West made a number of comments, accusations, allegations and predictions, so I must start by testing their credibility. It seemed that the best way to do so would be to examine his track record—if the House will forgive the expression—thus far. I looked back at our debate in January, when the hon. Gentleman had the following to say about through ticketing:
The thrust of the document"—
the regulator's document—
is about eroding the number of through-ticketing stations and the only argument is about how far and how fast that can be achieved. The document is consultative in name only."—[Official Report, 18 January 1995; Vol. 252, c. 716–17.]
I stood at the Dispatch Box and sought to persuade the hon. Gentleman that it was a consultation document. I told him that there were three options and I reaffirmed Ministers' commitment to through ticketing, but he would have none of it.
What happened? As of today, 1,300 stations will operate through ticketing. Why? Because the document was consultative and out of three options that was exactly what the public said they wanted. We heard a declaration—indeed, a declamation—from the hon. Gentleman that proved to be nonsense.
Let us see what the hon. Gentleman said about investment. In the second debate in our series, on 7 February, he said:
I have repeatedly made it clear that we believe in increased investment in the rail infrastructure by comparison with that of the present Government."—[Official Report, 7 February 1995; Vol. 254, c. 203.]
He said much the same today.
That made me wonder. It sounds terribly like a Labour party spending commitment, and we all know how hard it is to get one of those. I referred back to find out what Labour had spent in office to compare it with what we have spent, in order to determine what the hon. Member for Oldham, West was telling us in those elliptical terms. I discovered that, at constant prices, the Labour Government spent on average £926 million a year on British Rail. We have averaged just over £1 billion a year, so we now have the first firm Labour party spending


commitment for the next general election. A Labour Government will invest a minimum of £80 million a year more—and they will not get away with that, because the hon. Gentleman's high-flown rhetoric will drive the figure up even further.
Sir Bob Reid said that we needed to spend £1 billion on the railways this year. The hon. Member for Oldham, West will be encouraged to know that this year's figure for investment in British Rail is £1 billion. He will also be interested to know that Sir Bob Reid and Bob Horton have said that the railways have enough money this year to run as they should. I hope that he is encouraged by that too.

Sir Russell Johnston: Surely if we are talking about comparative investment figures, the basic comparison should be between what we have spent in this country and what has been spent in France and Germany. Between 1980 and 1989, Germany spent £14 billion and France £10 billion: this country spent £3 billion.

Dr. Mawhinney: If the hon. Gentleman does not like the Labour Front-Bench spokesman's argument, he must take that up with him. The hon. Member for Oldham, West compared investment in this country, so I responded to that. The House knows that, given the sniff of a vote anywhere, Liberal Democrats will promise another penny on income tax to try to meet the cost of the commitment, so I shall try to do some calculations for the hon. Gentleman and find out how much expenditure his intervention has committed the Liberal Democrat party to.
The third part of the credibility test for the hon. Member for Oldham, West concerns potential operators. He showed a touching concern for the private sector, which I welcome. In our debate on 18 January, he said:
The fact is that there is such investor apathy about the sales that minimising the conditions that franchisees must meet … is a vital part of the exercise, and the interests of the passengers come absolutely nowhere".—[Official Report, 18 January 1995; Vol. 252, c. 722.]
We have heard from potential bidders this week—people who have identified themselves as potential bidders, although for reasons of confidentiality I shall neither confirm nor deny the details. The hon. Member for Oldham, West will understand that. Talking of the fares announcement on Monday, Mr. Watt of British Bus said:
It's still very early days, we're assessing the bids or assessing the information that the Government are providing, and this is simply another parameter that comes into the whole bidding process".
James Sherwood said:
I don't think they're sending any message at all to the franchisees, I think they're trying to comfort the general public who is worried that the privatisation process is going to result in fares increasing by more than inflation. So … this is not a problem for the franchisees. I assure you that fares will not go up in any event, even if there was no cap, by more than inflation".
Ken Irvine, from Prism development, said:
There are areas where we think we can make our profits through improved efficiency, through new ideas in terms of the operations, and improving the marketing and quality of service to the customer.
A British Rail manager with an interest in a management buy-out said:
It's fantastic at last to have a policy which will actually encourage more people on to trains at peak times.

The House must decide whether it believes the hon. Member for Oldham, West—whose credibility decreases when we examine what he has said in previous debates—or those who have identified themselves as potential bidders. In my mind, there is no question but that the bidders know what they are talking about, and the hon. Gentleman can take that any way he wishes.

Mr. Meacher: If the right hon. Gentleman was so satisfied with the responses to his invitation to tender, why did he extend the pre-qualification registration period for the first three franchises by another month, and for the next five by another three months? Why was he so concerned during his recent visits to Japan for four days and to Korea for four days with trying to drum up interest in far eastern train operators buying into this country's rail system?

Dr. Mawhinney: I understand the hon. Gentleman's embarrassment, and the House sympathises with him. He is free-floating. One day he tells us that nobody will be interested in purchasing the franchises, but the next he is told that 37 companies have expressed an interest and that there have been more than 160 expressions of interest in the first eight franchises. He does not want this to succeed, and we all understand that, but a smidgen of intellectual rigour in his argument would impress the House a good deal more.
The hon. Member for Oldham, West issued a press release last Friday that was wisely ignored by the media. Let me give his press release a little airing on his behalf—I am always happy to help the hon. Gentleman. It said that I was to cap only standard fares and season tickets: wrong. He added "or all fares" just to be on the safe side: wrong. It continued:
In fact it is a disaster … it makes the sale of most franchises difficult—if not impossible":
wrong, as we have heard from four self-styled potential bidders.
The fares announcement will mean cuts in investment":
wrong. It went on:
The Government's entire privatisation programme is now threatened":
wrong. It is so threatened that today the invitations to tender for the first three franchises went out. My goodness, it feels like a very threatened privatisation.
To help the public deal with their confusion, the hon. Gentleman told "Today" on Monday that if we capped the revenue of operators
and therefore their profits, frankly I think this is the last straw, so the Government will be forced to provide a huge subsidy paid for by the taxpayer".
That is a large last straw. It is interesting—[Interruption.] Opposition Members must allow me to make my speech in my way, as my colleagues and I allowed the hon. Member for Oldham, West to make his speech in his way.
It is interesting that an arch advocate of what is gently referred to as "towards the left" of the Labour party suddenly wants to appear in the eyes of the great British public as being concerned about profits for private operators. A few weeks ago, the hon. Member for Oldham, West was saying that there were not going to be any profits. That was why there would be no bidders. It is a slide across credibility that defies analysis, much less acceptability. Or perhaps it is a reflection of the greatest economic miracle that this country has ever seen. For the


Labour party to move, in the space of two or three weeks, from no profits to profits so high that it wants to cap them would make the mind of the Chancellor of the Exchequer boggle.
On subsidy—

Several hon. Members: rose —

Dr. Mawhinney: The hon. Member for Oldham, West has encouraged me to talk about subsidy, so I shall do so.
The first point to make about subsidy is that if the hon. Member for Oldham, West goes back to the White Paper, all the debates on the Bill and all the comments afterwards he will see that everyone recognised that there had to be a continuing subsidy from the taxpayer. As he has reminded me on other occasions, that is true of every railway in the world, and it is true of ours too. If we have no subsidies, we cannot protect services, particularly those on commercially non-viable lines that are deemed to be important. On that point, we have a degree of commonality. The railway was restructured so that there would be one point of entry for subsidy: the franchising director.
Let me explain again to the hon. Gentleman that, in essence, we are franchising against a criterion of information about what subsidy people will need to run various franchises. It is not possible, therefore, to predict, as we sit here today, the level of subsidy.

Mr. Meacher: Why not?

Dr. Mawhinney: I shall tell the hon. Gentleman why not. First, we have a competitive bidding process and even the hon. Gentleman, with his tenuous grasp of the market, will understand that its effect will be to reduce rather than increase bids. Secondly—I would not expect the hon. Gentleman to understand this point—the difference between what is happening now and what will happen in the future is that we are restructuring the railway to generate efficiencies by moving from the public sector to the private sector—efficiencies that have characterised every previous privatisation. I would go even further and say that the efficiencies that have emerged following previous privatisations have been greater than many people predicted at the time of privatisation.
The hon. Gentleman needs to understand—forgive me, he does not need to as he has managed to get thus far without understanding—

Mr. McLeish: That is patronising.

Dr. Mawhinney: The hon. Gentleman is right. It sounded patronising and, whatever else I may do, I do not wish to sound patronising.
I hope that the hon. Member for Oldham, West accepts that a fundamental change is in the offing for the railways, from which benefits will flow. Unlike the hon. Gentleman, I believe that the benefits should be shared between passengers and private sector train operators. I should have thought that that would be common ground between us but, having listened to him over the past few weeks, I am no longer sure that it is.

Mr. Meacher: The Minister has made an important statement. He said that it is not possible to predict the subsidy that will be required for private operators. From

some experience of government, I believe that the Treasury would never permit such a policy to be adopted and announced without putting at least a rough estimate on what would be permitted. The Treasury would certainly never offer an open cheque book. Within what parameters does the Minister expect that subsidy to settle?

Dr. Mawhinney: The parameters are those that have been laid down on many occasions.
I remind the hon. Gentleman of what I said on Monday:
The Government remains firmly committed to the franchising process and to providing the subsidy needed to support passenger railway services, including the effects of the new policy on fares.
I am not at all clear whether the Labour party has switched from its demand that more and more taxpayers' money should be spent and now believes that less and less of their money should be spent. We are talking about a franchising, competitive bidding process, initiated today for the first three franchises. We will have to see what emerges, but I remain a good deal more sanguine than the hon. Member for Oldham, West.

Mr. Bruce Grocott: The right hon. Gentleman has said a great deal about intellectual rigour in his usual helpful manner. May we ask for just a little bit more of that from him? We are not asking for the parameters. Given his academic skills, the vast resources available to him at the Department of Transport and all the computers through which he can run the figures, will he please tell us the figures on which he has made his calculations about the subsidy that will be needed?

Dr. Mawhinney: I have not told the House that I have made any calculations. I have told the House about the bidding process. I have encouraged the House by quoting the potential operators, who understand, because they are in the marketplace, that the certainty of a seven-year fares regime, which most of them were not expecting, will allow them to make judgments about fares in the commercial framework. That certainty will enable them to appreciate the opportunities open to them in the fares structure and the provision of services structure to attract more people on to the railways. The opportunity to make such judgments will emerge from the efficiencies that will be generated by moving from the public to the private sector—something with which the Labour party has not even come to terms.
Let us consider the credibility test of the hon. Member for Oldham, West. On Monday, Sue MacGregor asked him:
But what do you plan to do about fares?
He replied:
Well on fares, as I said, we have a very different philosophy. What the Government have done is to put their money into road building and cars, it has produced congestion and pollution. I think a much better alternative is to switch money steadily in the transport budget out of road building into investment in both the quality and the quantity of public transport.
Sue MacGregor again asked him what he intended to do about fares and he said:
That would certainly enable us to reduce, or certainly to hold fares, and hopefully to reduce fares steadily in off-peak hours, and I think that is a way of restoring patronage in public transport, but the really key point is, the difference between us and the Government, is that it would not be necessary in our case to have huge swingeing increases in taxpayers subsidies to pay for it.


If I am clear, the hon. Gentleman is saying that the Opposition will decimate the roads budget and put it into the railways. The end result will be
to hold fares, and hopefully to reduce fares steadily in off-peak hours".

Mr. Michael Trend: We have done better than that.

Dr. Mawhinney: My hon. Friend is far too generous to the Opposition—we have done much better than that. The people will understand that. What about the credibility test on punctuality and reliability? The hon. Member for Oldham, West made much of that, but against the doom and gloom he offered to the House, he will be encouraged to know that in the first period of 1995–96 performance not only increased, but 88 per cent. of the passenger charter measurements were above the annual average.
Let us consider the credibility of the Opposition Front-Bench team. The hon. Member for Fife, Central (Mr. McLeish)—

Mr. Snape: Talk about the railways.

Dr. Mawhinney: I know that the hon. Gentleman does not like it, but if anyone was tempted to take seriously the contents of the speech of the hon. Member for Oldham, West, we need to know how much confidence we have can in them.
The hon. Member for Fife, Central also issued a press release on Wednesday. The press ignored it, as they did the one issued on Friday by the hon. Member for Oldham, West. I should like to be helpful to the hon. Member for Fife, Central by referring to it. In it, he said that the new fares structure was aimed at
protecting politically sensitive areas but exposing the majority of travellers to potentially unlimited fare rises.
That was wrong. It also stated that the announcement of
Tendering arrangements for the first three franchises to be privatised
had been "postponed indefinitely". That was on Wednesday; the arrangements have now been made public. According to the press release, the announcement of the new fare structure had been "postponed indefinitely"; it went out on Monday. Last Wednesday, the setting of minimum service standards for four further lines was "postponed indefinitely". That information went out on Tuesday.
I understand the embarrassment of the hon. Member for Fife, Central, but the country needs to know what he wanted it to know last Wednesday. Last Wednesday, he wanted the country to know that the establishment of a fares regime had been postponed indefinitely; the information went out on Monday. Service requirements for the next four franchises had also been postponed indefinitely; the information went out on Tuesday. Tendering for the first three franchises had been postponed indefinitely; that went out on Wednesday. Such is the credibility that we now attach to the utterances of Opposition Front Benchers.
Let me remind the House of the process in which we are engaged. I shall begin by setting down some common ground. In 1953, 17 per cent. of journeys in this country were made by train; today the figure is 5 per cent., and falling. In 1953, 24 per cent. of goods were transported by train; today the figure is 5 per cent., and falling.

Conservative Members, at least—and I shall go so far as to say that I believe that the hon. Member for Oldham, West agrees—want that relative decline to be halted, and then reversed. There is only one argument to address: can that be done in the public sector alone? The answer is clear; it is—after 40 years of relative decline—no.

Mr. Alex Salmond: Will the Secretary of State give way?

Dr. Mawhinney: No.
Let us consider past privatisations. The injection of private finance and investment decisions, private management skills and private sector sensitivity to customer needs has transformed those businesses and industries, to the benefit of their customers. No one, least of all Opposition Front Benchers, has produced any argument to suggest that rail privatisation differs fundamentally and qualitatively from other privatisations.

Mr. Hugh Bayley: Will the Secretary of State give way?

Dr. Mawhinney: No, I must make progress.
We are told that, if we had to privatise, we did so in the wrong way. European Commission railways policy, in directive 91/440, supports the division of railway business into more commercially oriented infrastructure companies, and separate passenger and freight service operations. That is exactly what we are doing. What is happening in Europe today? The German Government have split the operation of track infrastructure from passenger and freight services by establishing separate profit centres. The Dutch railway is to be split into four independent businesses covering passenger services, freight, infrastructure and capacity management. The Austrian railways were restructured in 1994 to separate infrastructure and train operations, and to make the full cost of operation transparent. The Danish railway has been organised into infrastructure, passenger and freight companies.
In other words, we are genuinely leading the world in separating infrastructure from the provision of services, and recognising the benefits that the passenger can gain from the injection of private sector finance. Labour's problem—clause IV or no clause IV—is that it is rooted in the demonology of trade unions circa 1960. I must tell the hon. Member for Oldham, West that there is no question of an erosion of services; quite the opposite.
My hon. Friends noticed, as I did, that the hon. Gentleman did not offer any alternatives. I need to say a quick word or two about that before I conclude. The country has a right to know what those who purport to be the next Government would do to the railways. I do not want to embarrass the hon. Member for Oldham, West; I want to look at the party's leadership. What does its leader say? He comes to the House on Tuesdays and Thursdays and says that he leads his party. Let us see what he says.
In October 1994 he said:
Railways should stay in public ownership.
But in January 1995 he said:
I'm not going to get into a situation where I am declaiming that the Labour Government is going to commit sums of money to renationalisation.


But also in January 1995, through his spokesman Alastair Campbell, he said:
If the railways are privatised … we have plans that under a Labour Government the railways will be publicly owned, publicly run railways.
[HON. MEMBERS: "Hear, hear."] I hope that Hansard will record growls of approval from the Opposition Front Bench.
In March 1995 the right hon. Member for Sedgefield (Mr. Blair) said:
Our goal is clear. It is to ensure that we continue to have a publicly owned, publicly accountable, properly planned network. Nothing else will do.
I was getting confused, as are my hon. Friends. The policies are here today, gone tomorrow. I wrote to the right hon. Gentleman on 3 May. I said:
I wrote to you on 13 January asking six questions about Labour's policy for the railways. You did not reply.
He did not even have the courtesy to acknowledge my letter. I continued:
I assumed that this was because you were unable to answer the questions before the outcome of Labour's debate on Clause 4. Now that your Party has expressed a definitive view on state ownership, I am writing to ask for answers to my questions. I asked you:
Do you intend to renationalise the railways?
If you do, would compensation be paid to the shareholders of Railtrack?
Precisely how would passenger services be brought back under state control, bearing in mind the legal franchises and contracts which will govern the use of the railways?
If you do not plan to renationalise, what changes would you make to the way the railways are run?
How would you fulfil Labour's commitment to encourage more passengers and freight onto the railways?
Would you invest more in the railways and, if so, how much?
I must amend that now to ask how much more it would be than the £80 million a year to which the hon. Member for Oldham, West has just committed his party.
My letter continued:
Your campaign against railway privatisation will continue to lack credibility until you tell the British people what plans you have for the railways. I look forward to receiving your response.
I put those questions to the hon. Member for Oldham, West in the first of our series of debates when the Labour party went one-nil down. After the second debate, the Labour party was two-nil down and after today it will be three-nil down. I was generous to the hon. Gentleman, as I invited him six times to attempt to answer even one elementary question about what might fleetingly be referred to as a smidgen of Labour party policy on the railways. The result was: nada, nothing, just a great big black hole.
I received no reply from the right hon. Member for Sedgefield in January, February, March or April. I wrote to him again in May and have received no reply thus far. I promise that I shall keep the House informed of the progress of the non-correspondence.
Today we have listened with interest to what the hon. Member for Oldham, West has had to say. Leadership—what leadership? Policy—what policy? Vision—what vision? As I sit here each time, I try to think who it is that the hon. Gentleman reminds me of. The last time he reminded me of one of those old-fashioned railway announcers who make plenty of noise but who do not

say anything intelligible. Today he reminded me of Violet Elizabeth Bott, Just William's friend. When she had nothing constructive to contribute and when she did not get her own way, she would say, "I'll thcweam and I'll thcweam and I'll thcweam." We have been entertained today by the hon. Gentleman's thcweam. That sums up the Labour party's policy on rail privatisation: a frustrated thcweam. I suggest that Labour Members continue to thcweam and we will deliver the benefits that the rail passengers of this country are crying out for and will receive.

Mr. Peter Snape: That was not so much a speech by the Secretary of State as an audition for a new job. It was the most deplorable speech that I have heard him deliver in the House. Having heard it, I shall proffer some advice to the Conservative party as a disinterested observer. The Conservatives would be better off sticking with the incompetence of the incumbent rather than putting up with that sort of behaviour. The Secretary of State did not mention the railway's present or future state; he simply made a series of cheap jibes reminiscent of a sixth form public school debate which were unworthy of a proper debate about the future of the railway industry. The Secretary of State should be ashamed of himself.
The state of our railway industry concerns many who have worked in that industry, and I must declare a passing interest as a member of the National Union of Rail, Maritime and Transport Workers. It also concerns those who rely on the railway industry for transportation of themselves or their goods and those who supply the industry with wagons, rolling stock and signalling equipment. It is interesting to see what those people have to say about privatisation. When the Bill to privatise the industry was first published, the Railway Industry Association made a submission to the Select Committee on Transport, in which it said:
The impact of rail privatisation, arriving during the continuing severe recession and at a point when order books are at an all-time low, poses a frightening risk to the railway supply industry. The fundamental danger is that the vital need for continuing investment—in both rolling stock and track signalling and electrification infrastructure—will be lost amid continuing political debate and organisational uncertainties about the new railway administrative structures and the passage of the Rail Privatisation Bill.
The Railway Industry Association recently submitted another paper to the same Committee, with the benefit of a year's experience of what has taken place since the passage of the Bill. It said:
Despite repeated past ministerial assurances that our anxiety over privatisation causing a hiatus in investment was unfounded, the opposite now seems to be accepted as inevitable, almost as policy in some quarters. With all its faults, the pre-privatisation process of public funding for railway investment gave both the operational railway and the supply industry some basis on which to plan production and investment strategy".
That is what the Railway Industry Association is now saying about privatisation, yet the Secretary of State did not refer to the plight of that industry or that of railway


administration. In his hackneyed collection of cliches, he referred to the efficiency of moving from the public sector to the private sector. It is interesting to examine what has happened since track and infrastructure were separated from the main railway business when Railtrack was created.
In its recent evidence to the Transport Select Committee examining railway finances, the Passenger Transport Executive Group listed examples of cost increases which have occurred since the supposedly wonderfully efficient system was introduced, particularly since Railtrack assumed responsibility for infrastructure projects in April last year.
Centro, the passenger transport authority covering my area, pointed out that Railtrack's site supervision and possession costs amount to 48 per cent. of the contract cost at Five Ways station just outside Birmingham, compared with BR's figure of 21 per cent. at University station or 27 per cent. at Longbridge. Is that the promised land?
In Greater Manchester, electrification from Castlefield to Salford Crescent was originally estimated by BR at £2 million; Railtrack now estimates the cost at between £4.2 million and £5.8 million. Is that the promised land?
In Merseyside, erection of a waiting shelter at Waterloo on the Southport line, to keep the rain off the passengers or customers, originally attracted no design costs because it would have been done in-house by BR. Railtrack's design estimate for a waiting shelter is £53,000.
The original InterCity 250 project in 1990 for the west coast main line was estimated to cost £750 million to provide new trains for the route and to carry out track alterations, including speed improvements and resignalling south of Weaver Junction. The current project is estimated at £1 billion for the entire route to Glasgow, but that figure excludes rolling stock and cab signalling equipment on trains.
Recently, I accompanied a delegation to see the Minister of State about the west coast main line. It did not get very far because he did not give the impression of having much idea about what we were talking about or when the scheme would commence.

Mr. Nigel Evans: On a point of order, Mr. Deputy Speaker. Considering what has occurred in the House in the past few weeks, would it not be appropriate if hon. Members who had something to declare did so at the beginning of their speeches? I notice that the hon. Member for West Bromwich, East (Mr. Snape) has listed in the Register of Members' Interests that he has remunerated directorships of West Midland Travel plc, Stage Carriage and Express Coach Services and Travel Agency.

Mr. Deputy Speaker: All right hon. and hon. Members know, or should know, the rules with regard to Members' interests. It is a matter for individual hon. Members.

Mr. Snape: In reply to that pretty cheap jibe, I declared an interest as a member of the RMT. The debate is about

railways, so I do not see what relevance a directorship of a stage carriage bus service in Birmingham has to the debate.

Mr. Evans: A lot.

Mr. Snape: The hon. Gentleman says, "A lot"—[Interruption.]

Mr. Deputy Speaker: Order. Will hon. Members quieten down and get on with the debate?

Mr. Snape: By the pretty loose standards of the Conservative party, it probably is a lot.
I was talking about the attitude of the Minister of State towards a particular project on the west coast main line. When I pointed out that the £1 billion to which I referred did not include a sum for locomotives and rolling stock, he gave us the impression that they were not necessary. I pointed out then, and I do so again now, that, if the project gets off the ground, it makes no sense to install a brand new cab signalling system in 25-year-old electric locomotives. I presume that modernising the west coast main line could, would or should include the provision of new rolling stock and locomotives.
The hiatus to which the Railway Industry Association referred, and to which I referred earlier, is occurring right now. There is a continual decline in the standard of service being provided by what is still known as British Rail, and no conceivable sign, particularly in respect of equipment and resignalling, of the much vaunted private finance initiative doing anything about it.
My hon. Friend the Member for Oldham, West (Mr. Meacher) detailed the collapse in investment in railway expenditure. Excluding channel tunnel expenditure, the Secretary of State is halving the money available for expenditure on the railway industry in the next couple of financial years. He shakes his head, but the figures are there. His own Department gave them recently to the Transport Select Committee. The total rail expenditure in 1994–95 of £1.1 billion includes an estimate of at least half that towards the channel tunnel and the remaining £615 million, which is my personal estimate of what will remain, represents almost a halving of the money available.
The Secretary of State's much vaunted policy announcements about reversing the drift of passengers and freight from rail to road will not be enhanced given those figures. Although he seemed tentatively to go back on that pledge in a television interview last Sunday, presumably it still stands.
Both sides of the House accept that Ministers did not actually intend the hiatus in railway investment to which I referred when plans for privatisation were formulated, but it is about time they accepted that it is happening. If my hon. Friend the Member for York (Mr. Bayley) catches your eye, Mr. Deputy Speaker, I am sure he will refer to that hiatus in respect of his constituency and the future of ABB Transportation.
Restructuring the industry and uncertainties over future funding resulted in fewer infrastructure projects being developed and fewer started. In 1990, 10 resignalling schemes were brought before Ministers for approval. In the current year, there is one. As far as I am aware, none is scheduled for next year.
The Secretary of State presumably travels by train. Why does he not take a cab ride from Euston up the west coast main line? With the exception of new power signalling installation at Crewe, he will find a mixture of 1960s power boxes, early BR equipment and some London, Midland and Scottish equipment. If he passes through my home town of Stockport—I invite him to do so when he comes to see his constituency football team—he will see a series of Victorian signal boxes that were erected in the 1880s. There is no lack of signalling projects on which money should be spent, but money is not being spent. Far from those projects being considered for future investment, they appear to have disappeared completely.
I referred earlier to the private finance initiative, which failed to deliver any new projects apart from the Northern line rolling stock deal. The Heathrow express and the Networker leasing deal were set up before PFI was established under Sir Alastair Morton. Decisions have yet to be made on the channel tunnel rail link, west coast main line, crossrail or Thameslink. All that work is crying out for decisions and investment, but there is no sign of the go-ahead from the Department. Within the restructured industry, there is no strategy or focus for planning that embraces track, trains and stations and Railtrack has still to publish its 10-year plan.
The whole chapter of railway privatisation has been a disaster. It will take more than blustering from the Secretary of State to convince us differently and it is about time that the Government recognise that the project will not work and drop the whole silly idea.

Dr. Robert Spink: I wish to speak in support of the amendment in the name of my right hon. Friend the Prime Minister and I shall immediately inform the House why.
Rail was first nationalised in 1948. I remember it extremely well because it was the year in which I was born. Since that time, some £54 billion of public money has been invested in the rail service.
We should examine the impact of nationalisation and that £54 billion investment. The story is not at all good. The Opposition are in error in painting a picture of the golden heyday of a nationalised British Rail service. No such time existed.
Rail did not flourish or prosper—quite the contrary. Services were awful. They were unreliable. Management was pitiful and customer care was non-existent. The railways were run for the benefit of the unions and the workers, rather than for the benefit of the public.

Mr. McLeish: Was the hon. Gentleman's speech written by Conservative central office, or does he have his own views?

Dr. Spink: The hon. Gentleman will be pleased to learn that I have sat here and written a few notes simply to remind me when I was born and what has happened to British Rail since then. Central office did not provide me

with any information whatsoever. I was not even planning to speak until I heard the disgraceful comments from the Labour Front Bench.

Mr. Jacques Arnold: Does my hon. Friend not find it rather odd for a Labour Front-Bench spokesman to suggest that my hon. Friend is using notes from Conservative central office, when all his information was collated by the research assistants and goodness knows what else in Walworth road which exist to support a Front Bencher? It comes ill from the hon. Gentleman on the Front Bench, who uses other people's notes, to make such a comment about a well-informed Back Bencher.

Dr. Spink: We have already heard that the hon. Member for West Bromwich, East (Mr. Snape) is sponsored by one of the rail unions. The hon. Member for York (Mr. Bayley) is also sponsored by a rail union. The hon. Member for Hampstead and Highgate (Ms Jackson), who is hoping to speak—

Mr. Deputy Speaker: Order. This is all very well and interesting, but let us get on with some responsible debate, please.

Dr. Spink: I take your advice, of course, Mr. Deputy Speaker.
The result of the nationalisation of rail services since 1948 and the investment in them of public money has been a deplorable fall-off in the share of journeys on rail. In 1953, rail had 17 per cent. of all journeys. Today, that figure stands at a miserable 5 per cent. Clearly, the Government had to act to reverse that trend and to redress the situation.
I suspect that the Opposition will continue to call for more public investment to subsidise rail. I shall come to that later; first, I want to put the record straight on recent capital investment, which has been at record levels in recent years—£6 billion during the past five years. I congratulate the Government on that achievement. They have done extremely well by my rail service, to which I shall also come in a moment.
The investment of more and more public money has not resolved, and could not resolve in the future, the difficulties, and deliver the improving standards, reliability in service and increase in passenger numbers that are so much needed and that would lead to a better and more vibrant rail service at lower cost to the public purse.
I want today to concentrate on the line that serves the majority of my constituents—the London-Tilbury-Southend line or the Fenchurch Street line. The majority of people who travel on that line use Benfleet station. The LTS line will, I suspect, be a microcosm of what will happen throughout British Rail as a result of the Government's initiatives. I welcome the excellent recent news for rail travellers.
The scene is now set, certainly in Castle Point, for a dramatic increase in passengers travelling on the Fenchurch Street line in coming years. I hope that we can climb back from the current level of passengers on the line, at about 22,500 passengers a day, and beat the peak number of passengers, which was more than 30,000. I hope that, by the millennium, we can reach a level of 35,000 to 40,000 passengers a day travelling on the Fenchurch Street line.
Let me say how we can achieve that. Passengers will be attracted by a range of factors. The most important of those is the real terms reduction in fares that can now be expected as a result of the Government's excellent strategy to hold fares at the level of inflation for three years and then to reduce fares below the retail prices index by 1 per cent. during the following four years, which should lead to a 4 per cent. overall reduction in fares in real terms by the year 2003. [Interruption.] That is not laughed at by my constituents as it is by Opposition Members. It is important to my constituents because they need to plan ahead. They need to decide how they will travel up to London, to the City or docklands, in order to work.
In addition, during the past two years there has been a continued improvement in service reliability. That is remarkable, particularly when one takes into account changes on those lines. Omelettes cannot be made without cracking eggs and the line has suffered disruption as a result of an important resignalling investment. Despite such disruption, dramatic improvements have been achieved on the line.
The Government have invested £150 million in the resignalling project, which started about 15 months ago and is now almost complete. It is delivering the goods. It will improve reliability tremendously. I am delighted to see the hon. Member for Fife, Central (Mr. McLeish) nodding in agreement. Why then did the hon. Member for Oldham, West (Mr. Meacher) not allow me to intervene when he said that investment in resignalling has been cut by two thirds? He did not because he is running scared of his own false information.
That is not the only improvement on the Fenchurch Street line. In about a year's time, we will have 25, 317 sliding-door trains to replace the 35-year-old slam-door trains. That will deliver further improvements in rolling stock. All those factors will help to bring people back on to the line.

Sir Michael Grylls: I am following my hon. Friend with great care and I am sure that he is right to say that privatisation, if it works properly, will attract more passengers on to the railways. Whatever our political point of view in the House, with the crowded roads and everything else, it must be everyone's wish to see more passengers on the railways. There is a huge incentive in privatisation for businesses to grow by attracting more passengers and by providing a better and better service. It is a classic service industry that needs to be in the private sector. It is amazing that the Opposition have not learnt that.

Dr. Spink: I am indebted to my hon. Friend who speaks with his characteristic wisdom on the matter. I shall come to the direct impact of privatisation and the new management and worker culture that that will bring with it, and the positive impact of that on customer care, service levels and innovation, providing, for example, new off-peak services which will also help to get passenger numbers up.
I introduced the subject by discussing the investment that my line has seen as a result of sound Government policy in this area. My hon. Friend the Member for Basildon (Mr. Amess) has been one of the prime movers who have pushed for investment in the line. He takes a great interest in what will happen in the franchise deal. I know that he continues to see Ministers. I believe that he

saw a Minister last night on the subject to press the case of his constituents in Basildon. He is an assiduous worker for his constituents, as we all know.

Mr. Nigel Evans: Does my hon. Friend find it somewhat bizarre that this is an Opposition day debate on the privatisation of the railways, yet only five Opposition Back Benchers are present and all of them are sponsored by the Transport and General Workers Union, the National Union of Rail, Maritime and Transport Workers or the Associated Society of Locomotive Engineers and Firemen? Where are all the others if they are so concerned about the railways?

Mr. Deputy Speaker: Order. I have already pointed out the limited time available. Seven hon. Members hope to catch my eye in the next hour and interventions of that nature do not help.

Dr. Spink: In that case, Mr. Deputy Speaker, I shall chug along.
Through ticketing is now offered by hundreds of stations, one of which is Benfleet in my constituency, the station which serves the greatest number of passengers who use that line. My constituents welcome that and are grateful to the Secretary of State.
We all read what the franchising director, Roger Salmon, said yesterday about passenger service requirements. Private operators, including those on the LTS line, will run more trains. We can look forward to innovative off-peak developments which will boost passenger numbers after line privatisation. I hope that the LTS line capacity will be increased by 13 per cent., as foreshadowed by the passenger service requirements announcement yesterday. That is good news for the people of Essex.
All that will lead to more passengers. More passengers will lead, naturally, to lower subsidies and less demand on the public purse. An increase in passengers will take vehicles off the road, which will help us environmentally and economically. Therefore, I very much welcome all those initiatives and strategies, all coming together this week, which is what I regard as a very positive week for rail for the people of Essex.
The current London-Tilbury-Southend line management are bidding, with some of their employees, for the franchise deal. The management have shaken off the "misery line" tag that was attached to the Fenchurch Street line and, in spite of all the disruption of the resignalling, have performed exceptionally well recently.
During the passage of the Railways Bill, I argued strongly with Ministers that local management and employee teams should be able to bid for franchises. I was delighted that provisions to that effect were included in the Bill in the end. I understand that a significant number of local rail employees, many of whom are my constituents, are interested in investing in and supporting the bid by the management and employees for the franchise. I say no more about that, because I might embarrass my right hon. Friend the Secretary of State, but the future has never appeared rosier for rail in Essex.
I shall now briefly discuss the national scene. We all want a more successful rail network, reducing public subsidy and helping to improve the environment. We all know that Conservative policy is delivering that. The policy, as applied to my local line, is an exemplar of that phenomenon. However, we do not know the Opposition's


policies. The Opposition owe it to the people to stop being dishonest and to tell us those policies, because they have, on that as on everything else, no policies. They are doubly dishonest on that, as on everything else.
On the elusive, job-destroying minimum wage, for instance, Labour Members promise the public everything, but will they say what amount it would be? No, of course not. They have no policies. The leader of the Labour party has no answers to the questions about levels of investment or the renationalisation of rail. He has a policy vacuum. Apart from confirming that, during the past two decades, he and the Labour party have been entirely wrong and we have been entirely right, he has nothing to offer. The Labour leader is frozen in our headlights like "Blair rabbit", with no original ideas. If Opposition Members want more investment, will they be honest—will they intervene on me now? I shall sit down and take an intervention. Will they tell me how much more investment they want?

Mr. Deputy Speaker: Order. Do not tell him.

Dr. Spink: Will the hon. Member for Ashfield (Mr. Hoon) tell me how much more investment he wants? Will he tell me where the money is coming from? Will he tell me which other services he would cut to provide that investment? Will he tell me which taxes he will raise to provide that investment? Of course not, because Labour Members are too dishonest. They are doubly dishonest.
Labour Members consider that the people of Essex are fools and do not understand that. The people of Essex will show them at the next general election, as they did at the last general election and the one before that and the one before that and the one before that. They are not fools, and they will not accept the Opposition vacuum.

Mr. Paul Tyler: One can always detect when a Minister expects to be reshuffled because he starts giving hostages to fortune with reckless abandon, confident that someone else will have to live with the consequences.
The Secretary of State said a few minutes ago:
there is no question of an erosion of services; quite the opposite".
That was almost the only positive statement in his speech, which was mostly good knockabout stuff about the Opposition. As the motion is all about Government policies, it is curious that he felt it necessary to spend so much time talking about the credibility of the Opposition.
As the right hon. Gentleman is the first Secretary of State for Transport in living memory to be perceived as being on the way up rather than on the way out, those hostages have an absurdly optimistic look about them. His statements in the past few days have forecast a dramatic improvement in passenger loading, in revenue and in profitability, and he repeated that forecast at the end of his speech.
The Secretary of State even suggested that that improvement will outweigh the cost of fare capping in the seven years that it will affect. I am sorry that the Secretary of State is no longer in his place as I wanted to test whether, on his criteria, there was credibility in the statement that capping rail fares

would mean the taxpayer having to provide more money for subsidies to British Rail and a bigger burden on the taxpayer.
Those were the words of the previous Minister for Public Transport, the right hon. Member for Kettering (Mr. Freeman). When the Minister for Railways and Roads, his successor, replies to the debate, I should like to hear whether he continues to agree with the right hon. Member for Kettering, because if so, everything that we have heard from the Secretary of State in the media and in the House today appears pretty silly.

Dr. Spink: Will the hon. Gentleman give way?

Mr. Tyler: No, I have hardly started. The hon. Gentleman took so long that he has cut down the time available to everyone else.

Mr. Deputy Speaker: indicated assent.

Mr. Tyler: I see that you agree, Mr. Deputy Speaker.
That statement was reported in The Times yesterday. The report concludes:
The credibility of Brian Mawhinney, the Transport Secretary, rests on him shelving the sale of Railtrack … Mr. Freeman's remark may become Dr. Mawhinney's political epitaph.
That is what has happened in the past few days—the Secretary of State, with reckless abandon, has turned the promises and assumptions of his predecessors on their head. It flies in the face of all the expert analysis and all the empirical evidence from this country and other countries. A more realistic projection would show that only about half the shortfall from fare capping can be made up in that way; however, by the time he is found out the Secretary of State will have got out of the hot seat—he will be out of the driver's cab.
That is the second lesson of the week. Despite all the ministerial wriggling both within and outside the House, denying direct responsibility for any of the uncomfortable truths that have emerged, the Secretary of State and his colleagues remain in hands-on charge of the railway system. Sitting next to the franchising director at the press conference, looking as though he was working the puppet on the string, was the Secretary of State. All the pretence that he has nothing to do with what is happening on important operational issues has been blown to smithereens.
Another lesson can be learnt from the events of the past two or three days. Again, we have had government by press release. The Secretary of State had an opportunity to explain in the House his rationale for all the statements that have emerged from the Department of Transport. Did he take it? Of course he did not. He simply had a go at the Opposition. This was the opportunity to come to the House of Commons and explain to sceptical Conservative Back Benchers as well as Opposition Members what is in his mind. Instead, what does he do? He softens up the public with a series of major media events. That is what is called managing the media. Then the Secretary of State ducked out of sight as soon as there was bad news to be told to the House or to the nation about his doom-laden enterprise.
The news is not good. There is no need to take my word for it. Listen to this, Mr. Deputy Speaker:
The new and very different regime that we are putting in place is bound to involve a significant period of adjustment before you can expect everything to be working smoothly.
And then:


we need to take stock and decide whether even the direction in which we have been going is the right one for the future".
Who was that? It was not a Liberal Democrat, nor a Labour spokesman, nor a sceptical Conservative—there are plenty of those on that issue—but the new chairman of British Rail, Mr. John Welsby, just appointed by the Secretary of State to carry through that enterprise. Obviously, that opinion may be influenced by the failure of Ministers to consult properly before changing all the privatisation signals.
I suspect that many of the key participants, the people whose business is affected by those changes of track, such as London Transport and British Rail, were given no forewarning of the events of the weekend and the statement on Monday although it affects all their budgeting and, indeed, everything that they do. Is it any wonder that people wonder what is happening?
Whatever the reason for that deep-seated lack of confidence within the industry, it is now obvious to everyone both within and outside it that the preparation for privatisation has resulted in a large and ever-growing hiatus in necessary investment. One can bandy figures around, but it is clear that there has been a hiatus in the past few months and in the past year. Whether an extra £500 million is required, or whether it is more or less, everyone accepts that there has been a hiatus.
Mr. Welsby assures us that, having slipped on the privatisation banana skin, the railways are recovering their poise. That is all very well, but surely it is always preferable to avoid the banana skin in the first place—and why the wanton and deliberate distribution of banana skins throughout the industry?
The most obvious way in which the travelling public are affected is in terms of punctuality and reliability. If we consider just the south-east, the blight is already apparent. The worst deterioration in reliability is on the Northampton line, where the percentage of trains cancelled has gone up by 219 per cent. The North London line has the largest number of cancellations—4,039 on that line alone, with nearly one service in 20 affected. The North London line also has the biggest increase in cancellations overall—1,253, up 34 per cent. on the previous year.

Mr. Streeter: I am not sure whether the hon. Gentleman is making a case for or against privatisation—it is possible that he may not make up his mind until the end of his speech—but is he aware that the Liberal Democrat-controlled council on the Isle of Wight has welcomed the fact that the Isle of Wight will be one of the first regions to have rail franchises? Does he agree with the council?

Mr. Tyler: I recognise that the hon. Gentleman does not often attend transport debates. If he did, he would have heard me answer that point on two occasions, I believe. We have never resisted the case for franchising individual services. We have always said that Railtrack is the key to an adequate and effective public service in the public interest.
Punctuality and reliability figures are not the whole story. Evidence of the myriad other ways in which the privatisation programme is devastating the network is piecemeal and anecdotal, but when it is all put together the picture is of a network already at sixes and sevens. I cite a trivial example which nevertheless illustrates the overall mind set that is taking such alarming hold on the

system. In Bolton, the Greater Manchester passenger transport executive had been planning to install new toilet facilities. Now, according to a spokesman, it cannot do so because
of the changes in procedures and organisations in the run-up to privatisation".
Replying to a passenger who complained about that, the spokesman said:
I am sure that you realise that it would be invidious if the investment of public money in funding improvements led to an increased demand for subsidy from the operators".
That is an extraordinary statement, and it has been replicated throughout the system. I wonder whether that spokesman will have to reconsider his comments following the Secretary of State's statement on Monday.
Up and down the country, people are finding it impossible to discover how to get from A to B—the prerequisite of a user-friendly rail network. If one travels from Bury St. Edmunds to London, one can go via Ipswich to Liverpool Street or via Cambridge to Kings Cross, but if one consults the timetable at Bury St. Edmunds or at Liverpool Street, one will find no evidence of the Cambridge trains. They are ghost trains; they do not exist, even though some of them are faster than other trains. Stranger still, at Kings Cross one will find no mention of the Cambridge trains either. That has presumably led many an unsuspecting, unwary passenger to slog across a bit of London to Liverpool Street, ignorant of the fact that there was a better train waiting just along the way.
That lunacy come about because the services via Ipswich are operated by Anglia, while those via Cambridge are operated by the West Anglia Great Northern line, and the two companies seem to have no great desire to co-operate. A WAGN line spokeswoman said:
it must be taken into consideration that during the restructuring for privatisation, British Railways was split into separate companies. Consequently, we have no more jurisdiction over a fellow train-operating company, such as Regional Railways, than we have over London Underground or any other public transport company".
It is no wonder that the travelling public think that the rail network is disintegrating because that is precisely what is happening.

Sir Russell Johnston: Will my hon. Friend allow me to give another example? He will know that on the 28th of this month all motorail services in the United Kingdom are to be terminated without any consultation. They used to carry 40,000 cars a year within what was InterCity, when Chris Green was the manager of InterCity, which made an overall profit. Is that not scandalous?

Mr. Tyler: I agree with my hon. Friend. His comment applies also to a number of sleeper services. I refer not to the one before the courts, but to other sleeper services. I hope that the Minister will deal with that point.
The position is deteriorating. The co-operation that the Minister claimed would be there is simply not there. I think that all hon. Members are grateful to Christian Wolmar and The Independent for their series on great railway disasters, which has pointed up some of the ways in which services are deteriorating. If some of the examples were not so tragic for passengers, many of them would be hilarious.
It is no wonder that British Rail is worried because it is likely to have to pick up the bits from this mess. As is widely known, in its evidence to the Select Committee on Transport, which has already been mentioned in the debate, British Rail expressed grave anxiety about the effects of the hiatus on the future of the railways. Investment in resignalling, which was its top priority, is way below desirable levels. The same is true of rolling stock, where little or no prospect exists of new orders. I hope that the Minister will tell us how much rolling stock has been ordered this year, and how much is in prospect for the next financial year.
Meanwhile, perhaps most serious of all, essential maintenance requirements are not being met, or people are just scraping by. Repairs that would once have been carried out on the same day are now delayed or are dropped in favour of supposedly temporary lash-ups. It is not commonly known that cracked rails, for example, are often clamped together rather than fully mended, and no one is sure what the fatigue life of those clamps may be. Speed and weight restrictions result. They last longer, are more common and have a more devastating effect. The east coast main line is a noteworthy victim, but other main lines are at risk.
I am glad to see that the hon. Member for St. Ives (Mr. Harris) is here as he and I share an interest in the main line through Cornwall. He may be interested to know that data from internal memoranda that I have seen suggest that an on-going decline in track standards is taking place on the Great Western main line. On the Plymouth to Penzance line in recent months, there have been major restrictions: 30 mph between Menheniot and Liskeard, 20 mph between Par and St. Austell, and 40 mph between Long Rock and St. Erth. That is having a devastating effect on the reliability of the timetable and is threatening the long-term future, whatever happens to the franchise, of the main line 125 express services through Cornwall. The hon. Gentleman knows all too well what effect that would have on the economy and, specifically, on the holiday industry.
Speed and weight restrictions are alarming in themselves, but if safety risks follow, the situation is obviously even more serious. Ministers profess ignorance, but the signs are not reassuring. Despite all that, it seems as though the early bidders for the train operating unit franchises may still find that they are offered enough sweeteners to make it all apparently worth while. Pumped-up subsidies and a benevolent interpretation of passenger service requirements could make bidding an attractive prospect for the first tranche. Ministers aim to have 51 per cent. of services in private hands by April next year, but there is still the other 49 per cent. and Railtrack. What sweeteners can the Secretary of State possibly offer to make that pig's ear look like a silk purse, or is he keeping his fingers crossed that he will by then have moved on and someone else will have to square the circle?
It is rather like the cases involving the first fundholding general practitioners or the first opt-out schools. They were attractive to start with, but latecomers did not receive so much and did not find it such an attractive prospect.
For years, Ministers have told us that fares must rise to cut subsidies. This week, however, we are told that fare cuts will attract so many new passengers on to the

railways that that will lead to subsidy cuts. The Secretary of State appeared to say that again this afternoon. We are all left wondering why, if that magic formula exists, Ministers did not find it many years ago.

Mr. James Clappison: I welcome the opportunity to make a brief contribution to the debate. My interest is on behalf of my constituents who use the railways, particularly those who commute every day from Potters Bar, Radlett, Elstree, Borehamwood, and other destinations on those lines.
The debate was opened by the Opposition in a way that is familiar to those of us who have attended other pre-privatisation debates. The general theme is that privatisation never works and that it will be a disaster. The hon. Member for Oldham, West (Mr. Meacher) went into some detail about that. What the hon. Member for Oldham, West said today belies the experience of other privatisations and what we have been told about new Labour. We have been told that new Labour is friendly to private enterprise, friendly to the market and friendly to private ownership, but there was nothing to distinguish what was said from the Labour Front Bench today from what has been said so many times since 1979 about so many other privatisations. It was a continuation of the same old socialist arguments. There was not even a dressing of new Labour to cover it up.
The reaction of both the Labour party and the Liberal Democrats to the announcement about fares was disappointing. Opposition Front-Bench Members could have found it in themselves to welcome the news that fares will be pegged over the next seven years. They should have welcomed the fact that there will be a real terms benefit to my constituents who use the railway as well as to other rail users, including their constituents. I did not hear a single word of welcome for that. Instead, what we saw clearly was disappointment etched on the faces of the spokesmen for both the Labour party and the Liberal Democrats about the good news that rail fares are to be held down—[Interruption.] The reaction of the Liberal Democrat spokesman was of equal disappointment. I can tell him that my constituents in Hertfordshire, including those who are told perpetually by the Liberal Democrats that rail fares should be held down, are pleased that they are being held down. They would rather hear that than hear complaints about toilet facilities in Manchester and the other long list of complaints that the hon. Gentleman gave.
The fact that the price of fares is to be held down is of interest to the Central rail users consultative committee. Major General Lennox Napier of that committee welcomed that as good news for passengers. He speaks for commuters. He said:
This announcement marks a turning point in policy. Holding fare rises down will increase the attractiveness of the railway and stimulate greater use. We have been calling for years for fare rises to be linked to inflation and quality of service. I am delighted that the Franchising Director, supported by extra Government subsidy, has adopted a policy which could result in a real fall in the cost of rail travel.

Mr. Tyler: Will the hon. Gentleman give way?

Mr. Clappison: I will not give way, because as the hon. Gentleman said in his speech, time is short.
Throughout the debate Opposition Front-Bench Members have been chanting from a sedentary position that fares have increased by 22 per cent. in real terms over the past 10 years. I must admit that that is right. If Opposition Members look a little further back, they will find that over the past 16 years of Conservative Government fares have increased in real terms by 29 per cent. As we have said, we want to change that. However, I warn Opposition Members, particularly the hon. Member for Oldham, West, not to go back any further because—[Interruption.] Well, I might be tempted. According to the figures supplied to me by the House of Commons Library, between 1974 and 1979 there was a real terms increase in rail fares of 31 per cent. That is more in five years under Labour than in 16 years under the Conservatives.
Another instructive feature of the statistics is that the figures that are not adjusted for inflation—the nominal increase—show that under the last Labour Government rail fares rose by over 170 per cent. That drives me to the conclusion that Opposition Members are no more entitled to lecture us on rail fares than they are on inflation.
Another argument used by Opposition Members is the lack of investment. The statistics seem to be at odds with what they are saying. The hon. Member for Oldham, West went into some detail on investment, but the statistics with which I have been supplied from the Library support what has been said by Conservative Members. Over the past 16 years the average investment in railways has been in excess of £1 billion, markedly higher than between 1974 and 1979.
The hon. Member for Oldham, West told us about the east coast main line. He used his experience of that line to illustrate his argument about the lack of investment. He mentioned particularly the line between London and Leeds. If Opposition Members want to choose any line to illustrate a lack of investment, they should not choose that one. They will know that over the past 16 years that line has been electrified and that the service has been considerably improved. Since the hon. Member for Oldham, West finished his speech I have been told by the Library that when his party left office in 1979 the fastest journey time between London and Leeds was just under two and a half hours. Today, the fastest service time between London and Leeds is just under two hours. The hon. Member for Fife, Central (Mr. McLeish) may laugh, but that is of interest to those who use the line.
The hon. Member for Oldham, West complained about a points failure on that line. The only points failure came at the beginning of his speech when he was asked, quite properly, by my hon. Friends about whether he would nationalise the railways and he said that he would return to that later. I was expecting an express journey to the end of his speech where he would tell us what he thought should happen. Instead, he did not reach his destination. We had a points change, a gentle shunt and ended up going backwards to where the hon. Gentleman had begun with a long list of complaints. We have no inkling what the hon. Gentleman would do about railway services.
What will be of interest to my constituents, apart from the good news about fares being held down, is that under privatisation they can look forward to a better quality of service and a greater sensitivity towards the needs of customers, which has been a characteristic of every other privatisation. I hope that in the coming years we will see the sensitivity that has been applied to fares being applied

to other parts of the service. I am thinking particularly about car parking charges. That is a matter of great concern to my constituents.
The cost of parking must be considered when we look at the cost of travel. On that point I must be critical. Over a number of years, certainly over the past five years, British Rail has insensitively increased parking charges way above the level of inflation. The increase has been an imposition on my constituents. This year alone there has been a 40 per cent. increase in charges for my constituents in Elstree and a 25 per cent. increase for my constituents who use the car park at Radlett.
I am told by my constituents in Radlett that since 1989 the cost of parking has more than doubled. Off-peak parking, which is particularly valued by my constituents in Radlett, was free before 1989; it then had a charge put upon it and has now increased to the full level. That causes considerable annoyance to my constituents. I have received many representations about that from individual constituents as well as from business people and local residents who are inconvenienced by the wider traffic implications and problems caused by the increased charges. I have received a particularly strong representation from the Radlett Society which I endorse fully.
When I took up the matter with British Rail its response was unsatisfactory. I was told that the increases were being imposed as a quid pro quo for improvements in service such as the introduction of closed circuit television. Those improvements have yet to come about and I have been told that no decision has yet been taken in principle to install closed circuit television in Radlett. Those are matters of concern to my constituents.
I expect such problems to be remedied by the greater sensitivity to customer needs that will come about after privatisation. We know from successive privatisations, beginning with British Airways in 1979, that once private sector management skills are introduced and there is access to the resources of private finance, there is a sea change in attitudes to the customer. In this case, not only will those factors be at work but the service will be backed by the stringent passenger service requirement agreed between the franchisee and the authority.
We expect a much better service. We have put out our proposals to improve services but have heard nothing at all from the Opposition about theirs. We heard nothing about how they would move to public ownership or about the compensation that might be payable in that event. My worry, on behalf of my constituents, is that the Opposition are determined on a course that will take us back to a declining railway service, that will require huge amounts of compensation and public money and from which my constituents will receive no benefit whatsoever.

Mr. Hugh Bayley: I am sponsored by the National Union of Rail, Maritime and Transport Workers, RMT. However, after the announcement last week of the closure of the York carriage works, I am sure that I speak on behalf of all my constituents when I tell the House that the mood in York is one of bitterness, anger and betrayal at what the Government have done to York with their rail privatisation measures.
There is bitterness because the Government promised that there would be no hiatus in rail investment, but there has been a hiatus and the works are closing as a result. There is anger at the comment that the Prime Minister made on the day that the closure was announced last week. He said that rail privatisation was no more to blame for the closure than it was to blame for an outbreak of measles. That flippant and foolish comment will hang round his neck and haunt him and the Conservative party in north Yorkshire for many years to come.
People in York, especially those at the carriage works, feel betrayed because the company, ABB Transportation, has done everything that the Government asked. It bought into the railways and invested £50 million in the York works. The workers have done everything that is necessary to double productivity and, together with the management, to design and build the most modern aluminium railway carriage body shell that is built in Europe—the only one that has the European Commission's full safety certification. They have done all that was asked of them and their hopes have been dashed by the closure, which has been brought about by the freeze in rail investment in the run-up to privatisation.
Two years ago the House debated the Railways Bill. When rail privatisation started, 4,687 people worked for British Rail or for ABB in my constituency. By the end of this year, on the basis of jobs that have gone already or redundancies that have already been announced, that number will have fallen by almost half to 2,583.
When he addressed the House, the Secretary of State sang the praises of privatisations in other industries. However, even he did not have the gall to mention the privatisation that was the stalking horse or pilot study for rail privatisation—the privatisation of British Rail Engineering Ltd. It was sold off in 1989 and since then, it has faced never-ending decline.
That is a disaster for the company that invested in the city of York, Derby and Crewe and a disaster for the work force. When the Railways Bill was going through the House, 1,600 people were employed at the York carriage works; now that number is down to 750. In the light of last week's announcement, by the end of this year, the last man will have walked through the factory gates for the last time. That will be it. After 150 years of building trains at York, it will all be over. Those 1,600 men, who helped to modernise the company to make it competitive and to design new products, which the Government said were wanted, will be cast on to the scrap heap.
Some weeks ago, I met a man who was made redundant from the York works in October 1993. Since then, he has had just nine weeks' work: four weeks one Christmas at one of York's chocolate factories and five weeks as a storeman at a local supermarket.
I have invited the Minister in the past to come to the York works to see what was threatened by rail privatisation and to meet the work force whose jobs are on the line. If he met that man or any of the other 750 still employed at the York works, could he honestly look them in the eye and tell them that rail privatisation was a success, that it was good for them or for the travelling public?
Nobody can say that the Government were not warned what rail privatisation would do. The Transport Select Committee called on the Government to
address the problem of the hiatus in rail investment.
The Government promised the House that there would be no such hiatus.
On BBC television, in December, Sir Bob Reid, then chairman of British Rail, said:
There is a hiatus. The question is, how short can that hiatus be kept? If that hiatus can be kept short, ABB will still be around to build trains.
Earlier this year, Eric Drewery, the chairman of ABB, warned the Transport Select Committee that if an order was not received extremely quickly, the York works would close and said:
To close down highly productive world-class manufacturing facilities is like a stab in the heart.
The Government have stabbed and the York works are bleeding to death.
On Friday, the day after the closure announcement, I met the company's managing director and asked him if there was anything that could be done at this late stage to save the York works. He said that there was only one thing: the Government could tell British Rail to authorise the follow-on order clause in its current contract. That, and that alone, could save the York works, because no other order could come in time to keep people in production. He gave a guarantee that if the Government took that action, his company would feel honour bound to continue production at the York works.
Why will not the Government act? Such action is affordable. It would cost the Government nothing this financial year, probably nothing in the next financial year and there would be a leasing charge of £10 million or £15 million in the following financial year.
The trains are needed. The Transport Select Committee received evidence that 2,500 London commuter carriages urgently need replacing. If the Government asked the Kent or Hertfordshire commuters whether new rolling stock was needed, they would get a resounding yes.
We also need action for the sake of industry. Other European countries are facing up to the need to reinvest in their railways and to maintain their manufacturing bases. Deutschebahn in Germany has placed orders for new rolling stock worth £4.6 billion; in Italy, orders in excess of £5 billion have been placed.
Those other members of the European Union are laughing all the way to the bank because, aided by ABB's main competitor GEC, they too are getting a large share of the new rolling stock orders that have been placed in this country. GEC won the contract to build the new trains for London Underground's north London line. It cannot build the aluminium body shells; there is only one company in Britain that builds modern aluminium body shells—ABB. GEC had to subcontract the work. ABB had bid for work and offered the lowest price but did not get the contract, which went instead to a GEC subsidiary in Spain.
By 1990, there was a £28 million deficit in the UK balance of trade in rolling stock. By last year, the deficit had risen to £126 million. With the loss of the ABB works in York, it will be even higher. Even if orders were only at the level of the past few years, there would be a net


reduction of £150 million a year on that balance of trade. We cannot afford the current deficit in industrial terms, or in railway terms.
Since the closure announcement, York city council has put up £50,000 and the North Yorkshire training and enterprise council has put up a similar sum in order to find alternative jobs for the redundant workers. The trade unions have talked to local engineering employers, and I hope and believe that they have found places so that at least the 20 apprentices can finish their training. However, the Government caused the problem and the Government must be part of the solution.
Will the Minister give an undertaking that the Government will put money into the York economy to find new jobs for the men whom they have placed on the scrap heap? There is no way that the existing economy there can find jobs for the 750 men who have been made redundant. Indeed, local employers have not been able to provide alternative jobs for the 1,100 people made redundant in the past two years. New jobs are needed in York. The Government could respond through their single regeneration budget and I ask them to say now what they are going to do to solve the employment crisis that rail privatisation has created in York.

Mr. Tim Smith: Like all hon. Members, I am a customer of British Rail, and so are most of my constituents. My interest in this debate relates to the quality of customer services provided by the railways and I believe that if we get that right, the employment that we seek will follow automatically. The important thing is to get the quality of service and the reliability right.
Nationalisation has been a great disappointment. In 1948, when the private railway undertakings were nationalised by the Labour Government, there were high hopes that bringing together all the businesses into British Rail would somehow improve the quality of service, reduce fares and increase the number of people using the railways. As we know, in the intervening period—almost 50 years—the proportion of people using the railways has fallen decade after decade and the proportion of freight being carried by rail has fallen too, as my right hon. Friend the Secretary of State told the House.
One of the main problems was the sheer size of the undertaking. British Rail was a massive organisation and its size made it difficult to manage. Ten or more years ago, the Government introduced private sector management into the organisation, since when there has been a succession of chairmen who have been some of our leading industrialists. Among the most successful, for example, was Bob Reid, the former chairman and chief executive of Shell UK. He was brought in to run British Rail but found it simply impossible to change things from the top down. The reason was that the culture of British Rail was so deeply ingrained that it was never going to be possible for one person, however skilled in management, to change it.
I strongly support the changes that are coming with privatisation, especially those in British Rail's structure. It is especially important to reduce the organisation to units that are easier to manage in human terms and more likely to relate to customers. There have already been changes, certainly on the two lines that serve my constituency.
I met the manager of the Chiltern line last week to talk about the changes being made in anticipation of privatisation. Apparently, it is still not possible to discover the line's turnover—how much it generates in fares and how much subsidy it receives. British Rail used to put all these things together in its accounts and even it did not necessarily know the subsidy for a particular commuter service although, clearly, it would know the income from fares. From 1 April a new company has been established under the Companies Acts which will run the line and, some time after the end of the financial year next March, we shall discover the line's turnover for the first time and what revenue subsidy it is receiving.
The good news is that the turnover is already starting to increase, the service is already more responsive to customers and the manager has brought in management from the private sector. I believe that the key management skill is marketing. With privatisation, there is a real opportunity to increase sales, contrary to what the hon. Member for Oldham, West (Mr. Meacher) said.
Basically, the railway business is a fixed-cost business. The fixed costs are the payments to Railtrack for the use of the system and the payments for the lease of the trains but, after that, it is up to the individual company to extract the maximum possible from the assets being used and to generate more business. I also believe that there are tremendous opportunities for increased efficiency. In every privatisation, we have tended to underestimate the scope for improved efficiency but, in this instance, there is also an opportunity to improve the quality of customer service and profitability and, at the same time, to reduce the subsidy paid by the taxpayer.
I greatly welcome the decisions made by the Government in the past three or four months, including that on through ticketing. It was right that there should be a proper debate on the matter. The more through ticketing there is, the greater the costs involved, but the public felt strongly that it should be maintained and I am glad that the Government decided not to change the present level of service.
I also welcome the more recent decision to peg fares for the next seven years. We have become used to that under previous privatisations and seen massive reductions in prices. I do not suppose that there will be such reductions in this industry but, if we have no real terms increases, that in itself will be a major step forward because, as we have heard, fares have increased by 22 per cent. in real terms over the past 16 years and, in the five years before that, by some 31 per cent. according to my hon. Friend the Member for Hertsmere (Mr. Clappison).

Mr. Peter Ainsworth: Like me, my hon. Friend represents part of the south-east where there is a great deal of concern about overcrowding on the roads and about the environmental damage done by cars. Does he agree that the decision to control fare increases on the railways might play a significant part in encouraging people out of their cars and back on to the rail network where that proves to be a sensible option?

Mr. Smith: There are two important matters when it comes to providing a decent rail service, and one is price. The hon. Member for Oldham, West was dismissive about that, but my hon. Friend is entirely right. Anyone examining the options will weigh up the price and possible benefits.
The other key characteristic—it is impossible to overstate its importance to a rail service—is reliability. My constituents want to know that the train will turn up at the time advertised in the timetable and arrive at its destination at the time advertised in the timetable. Indeed, every day a huge proportion of trains on the Chiltern line fulfil that desire. When the services are privatised, the incentive to ensure a reliable service will be greater than it has ever been.
Two characteristics will bring people back to using rail: first, the knowledge that prices will be pegged—they will not rise in real terms so people will be able to plan accordingly, as my hon. Friend the Member for Surrey, East (Mr. Ainsworth) said—and secondly, reliability. Those are the two most important aspects of customer service.

Mr. Tyler: If the Chiltern line is improving its reliability, does the hon. Gentleman accept that it is the exception that proves the rule? The figures published just two weeks ago showed that the reliability factors had deteriorated markedly on a national basis while privatisation has hung like a threat over the industry.

Mr. Smith: We are in a transitional period, as is inevitable with any privatisation. Of course the Opposition always exploit the situation. Once the process is complete, the service will improve. Management will have a major incentive to improve reliability because it is the key characteristic of a railway service. For that reason, I support the Government's proposals.

Ms Glenda Jackson: I declare an interest as I am sponsored by the rail drivers' union, the Associated Society of Locomotive Engineers and Firemen. I regret that the Secretary of State is not in his place. That he chose to approach this debate with a marked lack of gravity and seriousness, demeaned not only himself and the great office of state that he holds—although that is of no particular consequence—but a great industry and thousands of dedicated people who, in many instances, gave their lives in its service. I regret that he is not present to hear what I say, but no doubt he will be able to read it in the Official Report.
The hon. Member for Beaconsfield (Mr. Smith) referred, as did his hon. Friend the Member for Hertsmere (Mr. Clappison), to the capping of rail fares. I find it ironic that Conservative Members have attempted to present the capping of rail fares as anathema to Opposition Members. During Transport questions in January 1993, the then Minister for Public Transport, the right hon. Member for Kettering (Mr. Freeman), said in response to a question of mine that if I wished to see fare increases moderated and reduced, it would mean
the taxpayer having to provide more money for subsidies to British Rail".—[Official Report, 11 January 1993; Vol. 216, c. 597.]
He said that the difference between the Opposition and the Government was that the Government believed that rail passengers should pay the real fare for travelling on railways. I have no doubt that that reply was cheered to the echo by Conservative Members.
Yesterday, the minimum service standards that will be required of potential private rail operators were announced. The House will recall that the concept of minimum service standards was proudly trumpeted by the Secretary of State for Transport as a guarantee of levels of service to rail passengers for the very first time. However, when it was pointed out to him that those standards would lead to a 20 per cent. reduction in current service levels, the right hon. Gentleman attempted to reassure the public by saying that those minimum standards would not in fact ever be implemented. The Secretary of State must be one of the first politicians to have sought to convince people of the merits of his policy by pledging that it would never see the light of day.
This week we have again seen Ministers' efforts at describing the utopia set to greet rail passengers once they board the great rail privatisation express undermined by that boring old killjoy reality. The Prime Minister pledged in the House that rail privatisation would lead to better services for passengers. But if the standards outlined by the Secretary of State were ever to be implemented—perhaps the hon. Member for Castle Point (Dr. Spink) could inform his hon. Friend the Member for Basildon (Mr. Amess) of this fact as he is clearly not aware of it—peak services from Basildon to London would be cut by almost 60 per cent., peak services from Reading to London would be cut by almost 50 per cent. and Epsom commuters would face peak services cuts of 67 per cent.
This week's announcement on service levels was a disaster for the passengers who rely on Britain's rail network. The assault on the hard-pressed commuter, however, did not end with the publication of the passenger service requirement. Today, the franchising director published his invitations to tender. As the departing British Rail chairman Sir Bob Reid pointed out, an invitation to play a part in what is fast becoming the most shambolic privatisation of the past 16 years will be regarded by many as the most unwelcome invitation since the spider threw open his parlour to the fly.
In that document of invitations, potential bidders were warned about the London travelcard. It said:
Should London Underground, and/or any relevant bus operator introduce competing travelcards which do not include the option of travel on rail services, this may have a detrimental effect on their"—
the potential bidders—
revenue".
That same travelcard, which Ministers were pledging last year would be safe from rail, bus or even tube privatisation, could, according to the franchising director, be facing the axe, with the result that rail commuters will no longer be able to integrate their travel with the rest of the public transport system. Are Ministers also claiming that the abolition of the London travelcard and other travelcards around the country will constitute an improved service for commuters?
I cited the Secretary of State for Transport and his pledge that privatisation would lead to an improved and guaranteed quality of service. I wonder if, since he made that comment, he has had a chance to speak to his right hon. Friend the Member for St. Albans (Mr. Lilley). Last month, I had the pleasure of visiting St. Albans and experienced in particular the local rail service which links it to Watford, known locally as the Abbey Flyer. In 1988, North London railways spent more than £675,000 electrifying the Abbey Flyer route and improving the service. When I visited it, that good work was about to be


reversed. Due to shortages of rolling stock and no money to buy more, North London railways was being forced to remove the electric rolling stock from the line and replace it with old, less reliable diesel units. In addition, because of the extra costs of the new access charging regime, St. Albans council tax payers, who subsidise the Sunday Flyer service, were facing a bill for another £50,000 a year to keep it operating.
Thankfully, as a result of the campaign by the local Labour party and local commuter groups, North London railways announced last week that it had abandoned plans to replace the electric units, but the extra costs of keeping that service running will still have to be borne by the council tax payers of St. Albans and a reduction in late-night services is proposed. Elsewhere on the network, other commuters will still be rattling around behind 30 year-old diesel trains. That is the reality of rail privatisation: higher costs, for poorer services.
On Monday, the Secretary of State attempted to buy some good publicity for privatisation by announcing that he would be capping fares. As we all read in our newspapers on Tuesday, that attempt failed miserably. It did not fail because the idea was wrong in principle; there are good arguments for encouraging greater use of our public transport system by holding fares at reasonable levels. What tripped up the Secretary of State as he attempted his fares U-turn was once again the realities of the flawed rail privatisation policy that he was trying to sell.
If the Secretary of State had been seeking to cap fares in a public rail service, it would have cost approximately £35 million each year over the next three years, but, because of privatisation, that cost has leapt to more than £350 million over the same period. If one adds to that the estimated £1.25 billion overall cost of privatisation itself, one can see that instead of saving commuters' money through lower fares, the Secretary of State is costing them almost £1.5 billion in higher taxation.
That is the reality of privatisation from which the Secretary of State cannot escape. Those are the facts that cannot be hidden. At a time when hon. Members on the Back Benches behind him are desperately trying to clutch at the straws of tax cuts to save them from electoral oblivion, I humbly suggest that it will not be much longer before rail privatisation catches up with him and his Government for good.

Mr. Henry McLeish: It is a pity that the Secretary of State is not in his place, because he cast a blight over the debate by refusing to take any of the issues seriously. The country and the House are not in the mood to be lectured to by a Secretary of State who is overseeing the most monumentally stupid piece of public policy since the war, overseeing the destruction of a nationally integrated rail network and overseeing a privatisation that is nothing but a shambles.
If the privatisation were a shambles simply because the Government were not achieving any of their objectives, that would be bad enough. But the down side of the whole process is the fact that in the Government's search and in their obsession with privatisation they are causing immense damage to the fabric of the network and to the morale of the people who work in it.
It is extraordinary that when the Secretary of State was asked earlier how much his policy would cost, he simply did not know. That is a rich irony. The first cheque book is being taken out and the price is no object. The Government are saying that there is no price that they will not pay to implement that crazy privatisation process. If that is not irresponsible I do not know what is.
In Scotland we say that a person has "a guid conceit of himself", and it is ludicrous for a Secretary of State, who comes to the Dispatch Box to lecture us on a failing policy, to act in such a patronising manner. That is unforgivable, and I hope that if the Secretary of State does not arrive in time for the remainder of the debate, he will at least read the Official Report tomorrow.
As my hon. Friend the Member for Hampstead and Highgate (Ms Jackson) has said, the real tragedy is that of the men and women who work in the rail industry. Is it not sad that no one on the Government Benches is willing to raise the morale of those people by saying that they are doing a good job? We hear many comments about the failures of nationalisation over the past 50 years, and of course we do not have a perfect rail network. But surely there is a difference between saying that, and failing to give credit where it is due to the management and the work force of that great industry.
In the time available I shall concentrate on the evidence that we are submitting about the shambles and the mess that the Government have got themselves into. The passengers of this country, the people of this country—and, at some time in the future the electors of this country—will want to see that evidence.
The first great debacle was about the sleeper services. Is it not amazing that Government policy is now shaped in the courts rather than on ministerial desks? Why is there so much buck-passing, and why will no one take responsibility for anything? The Government tried to con the Scottish people over the costs, the local authority appealed and the matter is now before the courts. The British Railways Board's appeal will be heard on 1 June. I hope that British Rail will now withdraw its appeal. It must start listening to the travelling public instead of to the Government, because the Government are hell-bent on destroying the network. Surely the British Railways Board is the custodian charged with the responsibility of ensuring that the network continues.
As if the court case about the sleepers were not bad enough, my hon. Friend the Member for York (Mr. Bayley) has highlighted the tragedy of ABB. He asked the Government a simple question: why do they not intervene? The Secretary of State says that he is willing to pay any price for subsidies to put into franchises, but when we ask him to restore the domestic market for rolling stock, he does not care.
Of course we would not wish to use such a subsidy. As my hon. Friend said, the affair involves not subsidies but future leasing costs. The Government stand condemned for having put 750 people out of work, and they simply do not care. I challenge the Minister for Railways and Roads, when he replies, to tell the House why he does not care. But perhaps he will surprise us by telling us that he does care. If so, will he now order the British Railways Board to specify rolling stock requirements that will at least allow ABB to be a player in the domestic market? The whole business is a disgrace, and my hon. Friend has eloquently made the case for his local area.
The franchises are the third cause for concern. This morning the franchising director heralded a new dawn, and the Secretary of State said that we were now genuinely moving forward on privatisation. But that is late too. If those franchises go ahead—there is no guarantee that they will—they will not be operable until next year. We were promised that 51 per cent. of the franchises for the 25 train operators would be completed by May 1996. Once again, the timetable is in disarray. The Minister may want to give excuses and explain why the programme will not meet the targets. Now that the 51 per cent. has disappeared, what new target will the Government set?
The other issue is safety. How many logs are regularly leaked from Railtrack revealing that trains are still going through danger signals on to single tracks? We are spending £1.25 billion on the nonsense of privatisation, yet passenger safety is at risk throughout the country because of a lack of investment. Let us forget the politics; there is a huge moral issue at stake here. Can we let people travel on our railways in certain parts of the country when we are not employing proper safety procedures because the Government, like a drunken sailor, want to squander money on privatisation and politics rather than on people and safety? That is the issue that the Minister should deal with this evening. [Interruption.] I heard the hon. Member for Hertford and Stortford (Mr. Wells) say, from a sedentary position, "Humbug." I want it to be recorded in Hansard that the people who sit on the Conservative Front Bench think that the issue of safety is simply humbug—[Interruption.] And I want it recorded that not only was safety described as humbug, but there was then a systematic bout of laughter.

The Minister for Railways and Roads (Mr. John Watts): What the record should show, Mr. Deputy Speaker, is that my normally silent hon. Friend was describing the hon. Gentleman's argument rather than the importance of safety on the railways.

Mr. McLeish: The Minister's attempt to rescue the situation will also be recorded in Hansard as a dismal failure.
Apart from safety, the main issue that the Secretary of State dwelt on today was fares. I am pleased to see that the right hon. Gentleman has now returned to the Chamber. When the Government announced fare capping this week they thought that they would get a good press. But in every editorial in the quality newspapers the Secretary of State was hung, drawn and quartered—[Hon. Members: "No."] I suggest that Conservative Members read the editorials before commenting from a sedentary position.
It is right that the Government should be pilloried, because their fare capping is a con. We now know that only 50 per cent. of the fares in Britain will be regulated, and it is important to realise which fares will not be subject to regulation. They are: all first-class fares, cheap day returns, supersavers, Advance, Super Advance, Apex, Super Apex, Shuttle Advance, Shuttle Superadvance, and Network Awaybreak and Network Stayaway, which operate in the south-east.
So now we know that that great fare-capping initiative was a political exercise designed to silence the powerful arguments of commuters throughout the country, some of

whom voted Conservative at the last general election, although they may not do so next time. We know that 50 per cent. of the fares paid by the travelling public will not be covered by the capping scheme.
The Secretary of State's performance when he was asked to tell the House how much the extra subsidy would cost was worrying. How often have the Opposition heard the Government say, "What would Labour do?", "Isn't that a spending commitment?" and, "Won't that mean an increase in taxation?" What hypocrisy. What humbug—to coin a phrase. We now know, partly from what he said today, that the Secretary of State has apparently been given an open cheque book. There is no subsidy that he will not pay.
It is important to challenge the right hon. Gentleman again on that issue. Will the cost be £300 million over seven years? Will it be £400 million, or £500 million? The answer is simple: the cost does not matter to the Government. The privatisation policy is in such free fall that the Government are willing to use any part of the taxpayers' contribution to bail it out. The Government should be wary of using "tax and spend" as an attack on us in the future. The Secretary of State came to the Dispatch Box, allowed himself to be drawn into an issue and failed to rescue himself. He did not address the central question of what it will cost to ensure that the privatisation takes place.
Another issue of grave concern is the passenger service requirements. These were introduced with a fanfare of publicity, and the Government thought that they would get credit for them. But there are three passenger service requirements now confirmed, and we find that 15 per cent. to 20 per cent. of all services are to be axed. The Secretary of State says that that will provide the minimum, and that the commercial entrepreneurs lurking out there who are desperate to get their hands on a franchise will deliver improved services. Not only will they reinstate that 15 per cent. to 20 per cent., they will give us more services. That is a policy on a wing and a prayer which does not satisfy any of the passengers.

Mr. Nigel Forman: Is the hon. Gentleman aware of the parallel with British Airways which moved from the public to the private sector and began to expand its services in both range and quality?

Mr. McLeish: rose—

Dr. Mawhinney: He does not want to know the truth.

Mr. McLeish: The Secretary of State may say that, but let me address the comparison between this privatisation and any of the others. The Government took British Rail and smashed it into 95 pieces. They now want to sell all of the individual pieces under the guise of a nationally integrated rail network. One does not have to be a genius to work out that this privatisation bears no relationship to any other.
If one believes in the privatisation of British Rail—I do not—one must see that the Government could not have picked a worse method. Not only are they ideologically wrong, they have picked a method which beggars belief. No one can understand why, after going down the privatisation road, the Government then have sought to sabotage it by picking the silliest way possible to privatise.
The question of the invitation to tender was raised by several of my hon. Friends. This matter is seen by the Secretary of State as the start to the privatisation. It is important for this House, the press and the public to understand that this is all being done in secrecy. The Treasury's rules of commercial confidence mean that the director of franchising, Roger Salmon, has £2.1 billion tucked away. Vital services in three franchises are now going out to tender and the issue will be debated behind closed doors.
The British Railways Board did not even get the tender documentation which went out with the bids. It only runs the service at present, so obviously that was an oversight. The fact is that this is being done in secrecy, and the Minister should explain that to the House when he replies. Are we so concerned about whether Brian Souter of Stagecoach might bid l0p or 50p more than someone else when we come to consider ScotRail? The answer is obvious. The Government simply do not want anyone to look into a process which is a major mess.
If one thing above all characterises this privatisation, it is the question of buck-passing. One of the issues which concerns the Labour party, and I am sure the Liberal Democrats, is that of who takes responsibility. The Secretary of State seems to try to work it out on this basis. If he is dealing with an unpopular issue—such as fares—he will not only jump on the director of franchising, but will allow himself to be attacked by the Prime Minister, who has read material on the matter on the way back from Paris. If it is a sensitive issue and the politics are important enough, the Secretary of State will intervene.
If the issue is the Fort William sleeper service, on the other hand, does the Secretary of State really care? A judgment is made. He says, "It is a sleeper service on the periphery of the country which costs £2.5 million on the Government's figures. I will not intervene." We have the director of franchising, the rail regulator, the Minister responsible for railways, the Secretary of State for Transport and the Secretary of State for Scotland, but no one wants to take responsibility. That is shirking responsibility, and the Secretary of State should say whether he is in charge of his transport brief or whether his is only a selective responsibility when the issue suits his purposes.
In my possession I have the Great Britain passenger rail timetable. This will be a collector's item soon. But to add poignancy to the points which I have made this evening, the front cover of the timetable contains tracks, but no trains. That is a significant comment on where we are going. I ask the Minister to start to address the issues and to ignore the politics and the ideology of this crazy adventure.
When will someone in the Government have the courage to dump this whole exercise? How much taxpayers' money has to be squandered? How many jobs—such as those at ABB—will have to go? How many services do we have to lose? How much manipulation of British Rail accounts will be needed to soften and sweeten parts of the industry? What are the Government doing about Railtrack behind the scenes to fatten it up? [Interruption.] The Secretary of State winked at that point, which is significant.
If common sense prevails, the privatisation should end. We will work towards that, and I shall finish on a buoyant note. The Government are making such a hash of their own programme that I believe that there will be very little

for us to deal with in terms of what has been moved into the private sector. That will be important when we take over in government in 18 months or two years' time.

The Minister for Railways and Roads (Mr. John Watts): May I begin by reassuring the hon. Member for Fife, Central (Mr. McLeish) that the Great Britain timetable will continue in the privatised railway?
The Labour party has pursued rail privatisation policy through three debates of its own choosing rather like a hunt looking for a fox that finds that all the foxes have been shot. First came the scare about through ticketing; then came the wild allegations that passenger service requirements would lead to the decimation of services. Labour's motion today states that the threat of rail privatisation is leading to a "blight of investment".
Let us examine the facts. If the prospects of privatisation were blighting investment, we would expect to see that reflected in investment expenditure since we embarked on the process of preparing for privatisation. Figures show that in each of the past four years—a reasonable period in which to consider preparations for the privatisation programme—under this Government investment has been higher than in any year under the previous Labour Government. The average under that Labour Government between 1974 and 1978–79 was £924 million a year.

Mr. McLeish: Is that at today's prices?

Mr. Watts: Yes. I am not using any accountant's sleight of hand by not taking account of inflation.
In the past four years, investment expenditure has been: in 1990–91, £1,216 million; in 1991–92, £1,442 million; in 1992–93, £1,552 million; and in 1993–94, £1,188 million. That makes an average of £1,350 million in each of those years. The increase in real terms in average spend when comparing those four years with the last four years of the previous Labour Government is 46 per cent.

Mr. Meacher: Will the Minister give the figures excluding channel tunnel and European Passenger Services expenditure? Will he confirm that over the past four years there has been a steady decline in expenditure on the existing rail network, which, if we take into account expenditure this year, is about half what it was in real terms four years ago?

Mr. Watts: The hon. Gentleman has a strange idea of what constitutes a real railway. Does he suggest that the improved facilities between London and the channel tunnel are not part of the real rail infrastructure? One can exclude from an argument anything that is detrimental to one's own argument, but regular users of Eurostar and businesses that use freight services through the channel tunnel know all too well that the investment, which the hon. Gentleman rightly says includes investment to improve continental services through the channel tunnel, is very much real investment and it has led to real infrastructure.
I was asked about the current position. In 1994–95, investment was sustained at more than £1 billion and it continues at that level in the current year. My right hon. Friend the Secretary of State was asked how much Railtrack is investing. In the current year, Railtrack's investment programme is £625 million, an increase of 10


per cent. over the previous year. The Government need no lectures from the Opposition about the investment needs of the railway.

Dr. John Reid: I know that the Minister is honest and straightforward so I shall take his statistics at face value. I simply want to be clear about what he is telling the British people. Is he telling them, contrary to what we say, that the Government are spending more of their money to invest more in the railways in order that, when they are privatised, they will make more money, which will go back to the private sector? Is that what he is boasting about?

Mr. Watts: No. What I am boasting about, if "boasting" is the right term, is that, in the years of preparation for privatisation, which the Opposition's motion claims has been blighting investment, we have spent—

Dr. Reid: No, you have not. The taxpayers have spent.

Mr. Watts: The hon. Gentleman is right to make that point. Taxpayers, through the Government, have been providing British Rail and Railtrack with expenditure that is on average 46 per cent. up in real terms compared with the period when Labour was last in government.

Dr. Reid: rose—

Mr. Watts: I cannot give way again as I must seek to reply to a number of points.
A key feature of the privatisation policy is that the privatised railway, freed from public expenditure constraints—although they have not been as constraining as they were under the last Labour Government—will have access to the private sector to raise funds for investment. That will be important both for Railtrack and the rolling stock leasing companies.
I know that Opposition Members have an antipathy to looking at the success of privatisation policies, so I shall give them just one example. There is every realistic expectation that, after privatisation, investment will be higher. I refer Opposition Members to BAA, our airport operator, which, every year since it has been in the private sector has invested on average three times as much as it did when it was in public ownership.
The hon. Member for York (Mr. Bayley) referred to the proposed closure of the ABB works at York. I pay tribute to the hon. Gentleman, to my hon. Friend the Member for Ryedale (Mr. Greenway) and to my right hon. Friend the Member for Selby (Mr. Alison) for their efforts to ensure that their constituents who work at ABB would have the prospect of future work. I hope that the hon. Member for York will be generous enough to acknowledge that I have not been an entirely passive observer of those events. He will know that in March, although British Rail had concluded that it had no pressing commercial need to order further rolling stock, in recognition of the order position facing the manufacturing industry it issued an invitation to tender to ABB and to GEC Alsthom for a further supply of Networker trains for Kent services. Tenders are due in from those two manufacturers on 26 May.
The hon. Member for York will recognise that one reason why British Rail was prepared to offer such an invitation to tender was that it recognised the problems facing the industry and was aware of the concerns that the hon. Gentleman and my right hon. and hon Friends had been expressing on behalf of their constituents. However, no manufacturer can expect the right to supply what it wants to supply when it wants to supply it, regardless of the customer's requirements. British Rail does not want to order trains identical to those currently being constructed under the special £150 million leasing deal put together last year. Moreover, ABB must compete for whatever contracts are available in the marketplace. Part of ABB's problem is that it has failed to win enough of the contracts in the marketplace to secure the work load that it needs.
I know that we shall have a further opportunity to debate those issues next week in a debate which the hon. Member for York has requested, so I shall not go into further detail now. I must move on to other points.
Matters related to the creation of alternative employment opportunities, although not primarily a matter for my Department, will certainly be of concern to other Departments and I shall discuss with my ministerial colleagues in the relevant Departments the hon. Gentleman's point about the need to address employment problems in York.

Mr. Bayley: I acknowledge that the Minister put pressure on British Rail to seek tenders for orders in March, but does he acknowledge that that was too late? Last May, the Minister's predecessor, the right hon. Member for Kettering (Mr. Freeman), attended the York Rail Forum. He said:
There is a prima facie case for Kent Coast rolling stock.… in the period July-September 1994 the question of who places the order and who owns the stock and the train operating lease will be resolved.
Does the Minister recognise that, had the Government stuck to the timetable set down by the then Minister of State, we would not now have the crisis that has led to the closure of the York works?

Mr. Watts: As I have just explained, that would depend partly on whether ABB was successful in securing the order. Frankly, one of the major problems that ABB has faced is its failure to secure the orders that are available—for example, the order for Northern line trains worth £400 million, which was placed earlier this year, and last year the contract for the supply of Heathrow Express trains.
The hon. Member for Fife, Central expressed his concerns about passenger services. He seemed to think that there was something sinister about invitations to tender. He will be aware that there is no secrecy about passenger service requirements, which set out the guaranteed services for passengers. Invitations to tender are a matter of commercial negotiation but there is nothing sinister about that. Yesterday's announcement of the final PSRs for the first three franchises following consultation show that the consultation process on passenger service requirements is genuine.
The franchising director has announced a number of improved specifications to provide better services to passengers. For example, on the Great Western line, direct services are now to be specified from Reading and Swindon to Chippenham, Bath, Bristol and Cardiff. That will be welcome news to many of my right hon. and hon. Friends. Similar arrangements will be made for services to Didcot. Additional safeguards are being provided for first and last


trains, such as an early-morning arrival at Exeter. Maximum journey times are to be tightened and there is to be at least one "flagship" service both from south Wales and the west country, meeting the current best performance times.
As well as the rigorous requirements set out by the franchising director, Great Western Trains has announced that it is introducing an additional early-morning train from Penzance to Paddington with the introduction of the new summertime timetable. The night riviera sleeper service will now run to Waterloo to provide connections with Eurostar.

Mr. Tyler: rose—

Mr. Watts: I am sorry, I cannot give way because I am pressed for time.
The times of the first and last trains on South West Trains have been adjusted to provide earlier and later services. Stops on certain services have been guaranteed at Vauxhall, Clapham Junction, Wimbledon and Woking to facilitate connections to airports and London Underground. Seating capacity has been specified on peak period services from Salisbury to Exeter and from Reading. Extra connections have been specified at Basingstoke for the last train from Exeter. There will be an extra Sunday service from London to Exeter and an extra early morning arrival at Weymouth.
My hon. Friend the Member for Castle Point (Dr. Spink) expressed his confidence that the improved services for his constituents will encourage more people to travel by train. He is right that they will be attracted by real terms reductions in fares over the next seven years. He may be interested to know that I shall visit the London-Tilbury-Southend line tomorrow morning. My hon. Friend reminded us that services for his constituents have improved because of a £150 million investment in new signalling and the prospect of new rolling stock.
My hon. Friend the Member for Castle Point will be aware that the passenger service requirement announced yesterday provides improved safeguards for first and last trains on every route and full frequency services to Limehouse, which will provide an interchange with the docklands light railway. The PSR provides a new obligation on the Ockenden to Tilbury service to connect with the Tilbury ferry. [Interruption.] I am sorry if Opposition Members find the details of those service improvements boring, but as they continually claim that services are to be decimated it is important to set the record straight.
My hon. Friends the Members for Basildon (Mr. Amess), for Castle Point and others who represent Essex will also know that the new summer timetable, to be introduced later this month, will provide additional services between Upminster and Grays, which will serve the new station at Chafford Hundred. Their constituents will therefore have the environmentally friendly option of shopping at Lakeside and travelling there by train rather than having to use their cars.

Dr. Reid: What about toilets?

Mr. Watts: I have described improvements in services to passengers, but the hon. Gentleman asks me about toilets. I leave hon. Members to draw their own conclusion from that.
In addition to the new services I have mentioned, the new summer timetable includes several new services—for example, an hourly service from south Humberside to Doncaster, Sheffield and Manchester airport. That will operate in addition to the existing extensive range of rail connections to Manchester. New direct services will run from Brighton to Lewes, Eastbourne, Hastings and Ashford. They will provide direct connections with Eurostar trains when the international station at Ashford is open next year.

Mr. McLeish: Will Minister give way?

Mr. Watts: No, I cannot.
A through service will operate from Tunbridge Wells and Tonbridge to Redhill, Croydon and Victoria. A through service will also operate from Brighton, Worthing, Chichester and Havant to Fareham, Winchester, Basingstoke and Reading, which provides a practical and environmentally friendly alternative to using the M25 and A27.
Those improvements to PSRs and the additional services that are being introduced by British Rail create a different picture from that painted by Opposition Members. Far from being a rundown and running down railway system, it suggests a railway system that is gearing up to meet the opportunities and challenges of privatisation, and doing so with enthusiasm. I believe that managers in the railways and those who work on the railways—it is right to record our thanks to them for the sterling work that they have done for many years—will seize those new opportunities with great enthusiasm.
My hon. Friend the Member for Beaconsfield (Mr. Smith) recognised that there will be opportunity and incentive to develop services further and thus to increase revenue. That is how the private sector will respond.
My hon. Friend the Member for Hertsmere (Mr. Clappison) was right to welcome the new fares policy, on behalf of his constituents, which was spelt out earlier this week. Much to the embarrassment of Opposition Members, he reminded the House of the Labour Government's contrasting and appalling record on rail fares. He also raised the important issue of car parking at Radlett and other stations in his constituency. I am sure that his comments will be noted by British Rail and, more particularly, by those in the private sector who may eventually bid for the franchise.
The hon. Member for Fife, Central claimed that few fares would be controlled. In the course of a week, Opposition Members have gone from speaking about 100 per cent. control to little control. If the Opposition Front-Bench spokesman is right that few fares will be controlled, how can his hon. Friend the Member for Hampstead and Highgate (Ms Jackson) be right when she suggested that the cost of keeping down a small number of fares could lead to an extra subsidy of £350 million a year?

Mr. McLeish: Will the Minister confirm that 50 per cent. of the rail network will be unregulated? Will he also confirm the extent of subsidy to finance fare capping? The Secretary of State managed to avoid answering that question.

Mr. Watts: The proportion of fares controlled on each line will vary from line to line. It will also vary as between the amount of revenue that is controlled and the number of journeys subject to control. The policy is to control key


fares for commuters and other users rather than to regulate every fare. The hon. Gentleman will understand that, for example, if the saver fare is controlled, that will set a limit on the extent to which the cheaper and more heavily discounted, but more restricted fares can also be increased. If there was no significant differential between a saver and a supersaver, why would any passenger want to buy a supersaver? It is not necessary to control every fare to achieve broad regulation of fares across the railways.
Opposition Members must understand that the amount of subsidy will depend on the competitive bidding process in the letting of franchises. Unlike a monolithic nationalised industry, where increasing a subsidy merely means money is poured into a bottomless pit, competition between rival operators to secure the right to run rail services will effectively put a cap on the demands made for subsidy.
As my hon. Friend the Member for Beaconsfield reminded us, private sector operators will be looking for every opportunity to increase their revenue which, in itself, will reduce their demands for subsidy. They will not go to the franchising director and, like Oliver Twist, ask for more. They will seek to pitch their bids for subsidy at a level that secures for them the right to operate the services that they find attractive.
We are implementing a policy to arrest the long-term decline of the railway industry that we have seen ever since it was nationalised. From the Labour Government of 1964 to today, the proportion of passengers carried on the railways has reduced by 2 per cent. a decade. My hon. Friend the Member for Beaconsfield stressed the need for a new structure. That was not a criticism of the people who have worked in the railway industry through the dark days of nationalisation, but a recognition of the fact that the existing structure has failed them.
The Labour party may have buried clause IV in favour of voter-friendly language about the market economy, but its commitment to state ownership and control remains clear in the motion that it has tabled today. The command economy may be dead in eastern Europe, but it is alive and kicking in Walworth road.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 255, Noes 279.

Division No. 150]
[6.59 pm


AYES


Abbott, Ms Diane
Benn, Rt Hon Tony


Allen, Graham
Bennett, Andrew F


Alton, David
Benton, Joe


Anderson, Donald (Swansea E)
Bermingham, Gerald


Anderson, Ms Janet (Ros'dale)
Berry, Roger


Armstrong, Hilary
Betts, Give


Ashdown, Rt Hon Paddy
Blair, Rt Hon Tony


Ashton,Joe
Boateng, Paul


Austin-Walker, John
Bradley, Keith


Banks, Tony (Newham NW)
Bray, Dr Jeremy


Barnes, Harry
Brown, Gordon (Dunfermline E)


Barron, Kevin
Brown, N (N'c'tle upon Tyne E)


Battle, John
Bruce, Malcolm (Gordon)


Bayley, Hugh
Burden, Richard


Beckett, Rt Hon Margaret
Caborn, Richard


Beggs, Roy
Callaghan, Jim


Beith, Rt Hon A J
Campbell, Mrs Anne (C'bridge)


Bell, Stuart
Campbell, Menzies (Fife NE)





Canavan, Dennis
 Howarth, George (Knowsley North)


Chidgey, David
Howells, Dr. Kim (Pontypridd)


Chisholm, Malcolm
Hoyle, Doug


Church, Judith
Hughes, Kevin (Doncaster N)


Clapham, Michael
Hughes, Robert (Aberdeen N)


Clark, Dr David (South Shields)
Hughes, Roy (Newport E)


Clarke, Eric (Midlothian)
Hughes, Simon (Southwark)


Clarke, Tom (Monklands W)
Hutton, John


Clelland, David
Illsley, Eric


Clwyd, Mrs Ann
Ingram, Adam


Coffey, Ann
Jackson, Glenda (H'stead)


Cohen, Harry
Jackson, Helen (Shefld, H)


Connarty, Michael
Jamieson, David


Cook, Frank (Stockton N)
Janner, Greville


Cook, Robin (Livingston)
Johnston, Sir Russell


Corbett, Robin
Jones, Barry (Alyn and D'side)


Corbyn, Jeremy
Jones, Jon Owen (Cardiff C)


Cousins, Jim
Jones, Lynne (B'ham S O)


Cummings, John
Jones, Martyn (Clwyd, SW)


Cunliffe, Lawrence
Jowell, Tessa


Cunningham, Jim (Covy SE)
Kaufman, Rt Hon Gerald


Cunningham, Rt Hon Dr John
Keen, Alan


Dalyell, Tam
Kennedy, Charles (Ross,C&S)


Davidson, Ian
Kennedy, Jane (Lpool Brdgn)


Davies, Bryan (Oldham C'tral)
Khabra, Piara S


Davies, Rt Hon Denzil (Llanelli)
Kilfoyle, Peter


Davies, Ron (Caerphilly)
Kirkwood, Archy


Denham, John
Lestor, Joan (Eccles)


Dewar, Donald
Lewis, Terry


Dixon, Don
Litherland, Robert


Donohoe, Brian H
Livingstone, Ken


Dowd, Jim
Lloyd, Tony (Stretford)


Dunnachie, Jimmy
Loyden, Eddie


Dunwoody, Mrs Gwyneth
McAllion, John


Eastham, Ken
McAvoy, Thomas


Enright, Derek
McCartney, Ian


Etherington, Bill
McCrea, The Reverend William


Evans, John (St Helens N)
Macdonald, Calum


Ewing, Mrs Margaret
McFall, John


Fatchett, Derek
McKelvey, William


Field, Frank (Birkenhead)
Mackinlay, Andrew


Flynn, Paul
McLeish, Henry


Forsythe, Clifford (S Antrim)
Maclennan, Robert


Foster, Rt Hon Derek
McMaster, Gordon


Foster, Don (Bath)
McNamara, Kevin


Foulkes, George
MacShane, Denis


Fraser, John
Madden, Max


Fyfe, Maria
Maddock, Diana


Galbraith, Sam
Maginnis, Ken


Galloway, George
Mahon, Alice


Gapes, Mike
Mandelson, Peter


Garrett, John
Marek, Dr John


Gerrard, Neil
Martin, Michael J (Springburn)


Gilbert, Rt Hon Dr John
Martlew, Eric


Godman, Dr Norman A
Meacher, Michael


Godsiff, Roger
Michael, Alun


Golding, Mrs Llin
Michie, Bill (Sheffield Heeley)


Gordon, Mildred
Michie, Mrs Ray (Argyll & Bute)


Graham, Thomas
Milburn, Alan


Grant, Bernie (Tottenham)
Miller, Andrew


Griffiths, Nigel (Edinburgh S)
Morgan, Rhodri


Griffiths, Win (Bridgend)
Morley, Elliot


Grocott, Bruce
Morris, Rt Hon Alfred (Wy'nshawe)


Hain, Peter
Morris, Estelle (B'ham Yardley)


Hall, Mike
Morris, Rt Hon John (Aberavon)


Harvey, Nick
Mowlam, Marjorie


Hattersley, Rt Hon Roy
Mudie, George


Henderson, Doug
Mullin, Chris


Heppell, John
Murphy, Paul


Hill, Keith (Streatham)
Oakes, Rt Hon Gordon


Hinchliffe, David
O'Brien, William (Normanton)


Hodge, Margaret
O'Hara, Edward


Hoey, Kate
Olner, Bill


Hogg, Norman (Cumbernauld)
O'Neill, Martin


Hood, Jimmy
Orme, Rt Hon Stanley


Hoon, Geoffrey
Parry, Robert






Pearson, Ian
Soley, Clive


Pendry, Tom
Spearing, Nigel


Pike, Peter L
Spellar, John


Pope, Greg
Squire, Rachel (Dunfermline W)


Powell, Ray (Ogmore)
Steel, Rt Hon Sir David


Prentice, Bridget (Lew'm E)
Steinberg, Gerry


Prentice, Gordon (Pendle)
Stevenson, George


Prescott, Rt Hon John
Stott, Roger


Primarolo, Dawn
Strang, Dr. Gavin


Quin, Ms Joyce
Sutcliffe, Gerry


Randall, Stuart
Taylor, Mrs Ann (Dewsbury)


Raynsford, Nick
Taylor, Matthew (Truro)


Reid, Dr John
Timms, Stephen


Rendel, David
Touhig, Don


Robertson, George (Hamilton)
Tyler, Paul


Robinson, Geoffrey (Co'try NW)
Vaz, Keith


Roche, Mrs Barbara
Walker, Rt Hon Sir Harold


Rogers, Allan
Wallace, James


Rooker, Jeff
Walley, Joan


Rooney, Terry
Wareing, Robert N


Ross, Ernie (Dundee W)
Watson, Mike


Rowlands, Ted
Wicks, Malcolm


Salmond, Alex
Wigley, Dafydd


Sedgemore, Brian
Williams, Rt Hon Alan (Sw'n W)


Sheerman, Barry
Williams, Alan W (Carmarthen)


Sheldon, Rt Hon Robert
Wilson, Brian


Shore, Rt Hon Peter
Winnick, David


Short, Clare
Wise, Audrey


Simpson, Alan
Worthington, Tony


Skinner, Dennis
Wray, Jimmy


Smith, Andrew (Oxford E)
Wright, Dr Tony


Smith, Chris (IsI'ton S & F'sbury)
Young David (Bolton SE)


Smith, LIew (Blaenau Gwent)
Tellers for the Ayes:


Smyth, The Reverend Martin
Mr. Stephen Byers and


Snape, Peter
Mr. Robert Ainsworth.


NOES


Ainsworth, Peter (East Surrey)
Burt, Alistair


Aitken, Rt Hon Jonathan
Butcher, John


Alison, Rt Hon Michael (Selby)
Butler, Peter


Allason, Rupert (Torbay)
Butterfill, John


Amess, David
Carlisle, John (Luton North)


Arbuthnot, James
Carlisle, Sir Kenneth (Lincoln)


Arnold, Jacques (Gravesham)
Carrington, Matthew


Arnold, Sir Thomas (Hazel Grv)
Carttiss, Michael


Ashby, David
Cash, William


Atkins, Robert
Channon, Rt Hon Paul


Atkinson, David (Bour'mouth E)
Chapman, Sydney


Atkinson, Peter (Hexham)
Clappison, James


Baker, Rt Hon Kenneth (Mole V)
Clark, Dr Michael (Rochford)


Baker, Nicholas (North Dorset)
Clifton-Brown, Geoffrey


Baldry, Tony
Coe, Sebastian


Banks, Matthew (Southport)
Colvin, Michael


Batiste, Spencer
Congdon, David


Bellingham, Henry
Conway, Derek


Bendall, Vivian
Coombs, Anthony (Wyre For'st)


Beresford, Sir Paul
Cope, Rt Hon Sir John


Biffen, Rt Hon John
Cormack, Sir Patrick


Booth, Hartley
Couchman, James


Boswell, Tim
Cran, James


Bottomley, Peter (Eltham)
Currie, Mrs Edwina (S D'by'ire)


Bottomley, Rt Hon Virginia (SW Surrey)
Curry, David (Skipton & Ripon)



Davies, Quentin (Stamford)


Bowden, Sir Andrew
Davis, David (Boothferry)


Bowis, John
Day, Stephen


Boyson, Rt Hon Sir Rhodes
Deva, Nirj Joseph


Brandreth, Gyles
Devlin, Tim


Brazier, Julian
Dicks, Terry


Bright, Sir Graham
Dorrell, Rt Hon Stephen


Brooke, Rt Hon Peter
Douglas-Hamilton, Lord James


Brown, M (Brigg & Cl'thorpes)
Dover, Den


Browning, Mrs Angela
Duncan, Alan


Bruce, Ian (Dorset)
Duncan-Smith, Iain


Budgen, Nicholas
Dunn, Bob


Burns, Simon
Durant, Sir Anthony





Eggar, Rt Hon Tim
 Knight, Mrs Angela (Erewash)


Elletson, Harold
Knight, Greg (Derby N)


Emery, Rt Hon Sir Peter
Knox, Sir David


Evans, David (Welwyn Hatfield)
Kynoch, George (Kincardine)


Evans, Jonathan (Brecon)
Lait, Mrs Jacqui


Evans, Nigel (Ribble Valley)
Lamont, Rt Hon Norman


Evans, Roger (Monmouth)
Lang, Rt Hon Ian


Evennett, David
Lawrence, Sir Ivan


Faber, David
Legg, Barry


Fabricant, Michael
Leigh, Edward


Fenner, Dame Peggy
Lennox-Boyd, Sir Mark


Field, Barry (Isle of Wight)
Lester, Jim (Broxtowe)


Fishburn, Dudley
Lidington, David


Forman, Nigel
Lightbown, David


Forsyth, Rt Hon Michael (Stirling)
Lilley, Rt Hon Peter


Forth, Eric
Lloyd, Rt Hon Sir Peter (Fareham)


Fowler, Rt Hon Sir Norman
Lord, Michael


Fox, Dr Liam (Woodspring)
Lyell, Rt Hon Sir Nicholas


Fox, Sir Marcus (Shipley)
MacGregor, Rt Hon John


Freeman, Rt Hon Roger
MacKay, Andrew


French, Douglas
Maclean, David


Gale, Roger
McLoughlin, Patrick


Gallie, Phil
McNair-Wilson, Sir Patrick


Gardiner, Sir George
Madel, Sir David


Garel-Jones, Rt Hon Tristan
Maitland, Lady Olga


Garnier, Edward
Major, Rt Hon John


Gill, Christopher
Malone, Gerald


Gillan, Cheryl
Mans, Keith


Goodlad, Rt Hon Alastair
Marlow, Tony


Goodson-Wickes, Dr Charles
Marshall, John (Hendon S)


Gorman, Mrs Teresa
Marshall, Sir Michael (Arundel)


Gorst, Sir John
Martin, David (Portsmouth S)


Grant,Sir A (SW Cambs)
Mates, Michael


Greenway, Harry (Ealing N)
Mawhinney, Rt Hon Dr Brian


Griffiths, Peter (Portsmouth, N)
Mayhew, Rt Hon Sir Patrick


Grylls, Sir Michael
Mellor, Rt Hon David


Gummer, Rt Hon John Selwyn
Merchant, Piers


Hague, William
Mills, Iain


Hamilton, Rt Hon Sir Archibald
Mitchell, Andrew (Gedling)


Hamilton, Neil (Tatton)
Mitchell, Sir David (NW Hants)


Hampson, Dr Keith
Moate, Sir Roger


Hanley, Rt Hon Jeremy
Monro, Sir Hector


Hannam, Sir John
Montgomery, Sir Fergus


Hargreaves, Andrew
Needham, Rt Hon Richard


Harris, David
Nelson, Anthony


Haselhurst, Alan
Neubert, Sir Michael


Hawkins, Nick
Newton, Rt Hon Tony


Hayes, Jerry
Nicholls, Patrick


Heald, Oliver
Nicholson, David (Taunton)


Heath, Rt Hon Sir Edward
Norris, Steve


Heathcoat-Amory, David
Onslow, Rt Hon Sir Cranley


Hendry, Charles
Oppenheim, Phillip


Hicks, Robert
Page, Richard


Higgins, Rt Hon Sir Terence
Pattie, Rt Hon Sir Geoffrey


Hill, James (Southampton Test)
Pawsey, James


Hogg, Rt Hon Douglas (G'tham)
Peacock, Mrs Elizabeth


Horam, John
Pickles, Eric


Hordem, Rt Hon Sir Peter
Porter, Barry (Wirral S)


Howard, Rt Hon Michael
Porter, David (Waveney)


Howarth, Alan (Strat'rd-on-A)
Portillo, Rt Hon Michael


Howell, Rt Hon David (G'dford)
Powell, William (Corby)


Howell, Sir Ralph (N Norfolk)
Redwood, Rt Hon John


Hughes, Robert G (Harrow West)
Renton, Rt Hon Tim


Hunt, Sir John (Ravensbourne)
Rifkind, Rt Hon Malcolm


Hunter, Andrew
Robathan, Andrew


Jack, Michael
Robinson, Mark (Somerton)


Jenkin, Bernard
Roe, Mrs Marion (Broxbourne)


Jessel, Toby
Rumbold, Rt Hon Dame Angela


Johnson Smith, Sir Geoffrey
Ryder, Rt Hon Richard


Jones, Gwilym (Cardiff N)
Sackville, Tom


Jones, Robert B (W Hertfdshr)
Sainsbury, Rt Hon Sir Timothy


Jopling, Rt Hon Michael
Scott, Rt Hon Sir Nicholas


Kellett-Bowman, Dame Elaine
Shaw, David (Dover)


King, Rt Hon Tom
Shephard, Rt Hon Gillian


Kirkhope, Timothy
Shepherd, Colin (Hereford)


Knapman, Roger
Shepherd, Richard (Aldridge)






Sims, Roger
Townsend, Cyril D (Bexl'yh'th)


Smith, Tim (Beaconsfield)
Tracey, Richard


Soames, Nicholas
Trend, Michael


Spencer, Sir Derek
Twinn, Dr Ian


Spicer, Sir James (W Dorset)
Vaughan, Sir Gerard


Spicer, Michael (S Worcs)
Viggers, Peter


Spink, Dr Robert
Waldegrave, Rt Hon William


Spring, Richard
Walden, George


Sproat, Iain
Walker, Bill (N Tayside)


Squire, Robin (Hornchurch)
Waller, Gary


Stanley, Rt Hon Sir John
Ward, John


Steen, Anthony
Wardle, Charles (Bexhill)


Stephen, Michael
Waterson, Nigel


Stem, Michael
Watts, John


Stewart, Allan
Whitney, Ray


Streeter, Gary
Whittingdale, John


Sumberg, David
Widdecombe, Ann


Sykes, John
Wilkinson, John


Tapsell, Sir Peter
Willetts, David


Taylor, Ian (Esher)
Wilshire, David


Taylor, John M (Solihull)
Wolfson, Mark


Temple-Morris, Peter
Wood, Timothy


Thomason, Roy
Yeo, Tim


Thompson, Sir Donald (C'er V)
Young, Rt Hon Sir George


Thompson, Patrick (Norwich N)



Thornton, Sir Malcolm
Tellers for the Noes:


Thumham, Peter
Mr. Bowen Wells and


Townend, John (Bridlington)
Mr. Michael Bates.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House applauds the record levels of investment in the railways in recent years, including more than £6 billion over the last five years; notes that since nationalisation, despite investment of more than £54 billion in the railways, the proportion of travel undertaken by train has steadily decreased; believes that the railways will be better placed to offer an improved service in the private sector; welcomes recent announcements by the Franchising Director, which represent significant milestones on the path to a privatised railway; supports the new rail fares regime, which will see ticket prices regulated on every line in the country and will produce real fare reductions; believes that the Franchising Director's announcement struck a proper balance between the interests of the passenger and train operators; and condemns the continued failure of Her Majesty's Opposition to offer any policy to stem the relative decline in railway use.

Nuclear Power Industry

Madam Speaker: I have selected the amendment standing in the name of the Prime Minister.

Mr. George Robertson: I beg to move,
That this House believes that the privatisation of the nuclear power industry is unwanted and unnecessary and is not based on an assessment of Britain's long-term energy needs or industrial strategy but is a cynical, short-term move designed to raise money for tax cuts before the next General Election; further believes that taxpayers will be left with the bill for the decommissioning of the Magnox stations and for the management of the nuclear waste that accrues, that nuclear privatisation will do nothing to promote the interests of consumers, and that claims of guarantees on distinct identities for Scottish Nuclear and Nuclear Electric are worthless; and calls on Her Majesty's Government to abandon immediately its plans to privatise the nuclear power industry.
Two weeks ago, the Conservative party lost 2,500 local government seats all over England and Wales. After the wipeout that it had suffered in Scotland one month earlier, it was left with only a miserable control of eight councils in England and none in Scotland and Wales. That was, by any standards, an unprecedented and unmistakeable rebuke to the Government. In any other democracy, it would have led to the Prime Minister's head rolling down Whitehall.
What has the Government's response to the salutary verdict of the people been? Has it been contrition? No hope. Has it been reflection? Not even for a moment. Has it been a recognition that some policies may be wrong and need changing? Fat chance of that. Instead, the voters will receive more of exactly the same mixture that brought about the local council humiliation. The first signal of a contempt for the democratic voice was the announcement last week of the last desperate privatisation of the nuclear power industry.
The Conservative party is addicted to privatisation. Having got rid of the last family spoons from the cupboard, it is now down to the family's nuclear reactors—that is the act of a Government in desperate and terminal trouble. Let us not forget that this was the privatisation from which even Mrs. Thatcher walked away. It seems that when it came to the nuclear industry, the lady was for turning. Why does not the Secretary of State for Scotland—he was, allegedly, one of those who opposed it in Cabinet—tell the President of the Board of Trade, even if he is in China, that he should do the country a favour by ensuring that Mrs. Thatcher's U-turn is replicated in 1995?
This privatisation has nothing to do with energy policy or industrial strategy. It is
to be shaped by political pressures and the interests of future shareholders, not by the needs of electricity consumers.
Those are not my words or the words of any Opposition politician; they are the words of last Wednesday's Financial Times editorial. They should be marked by the Government because they speak the truth.
The privatisation is just a cynical and desperate attempt to raise money for tax bribes before the next election. The same wonderful people who gave us the dash for gas now give us the dash for cash. It is no coincidence that the madcap scheme comes when the Government have discovered an overshoot of £1.2 billion in their borrowing targets and a gaping hole in their tax bribe treasure chest.


Ministers now seem prepared to sell anything, even the most sensitive of industries, to plug the hole in Treasury coffers.
The consumer is offered what looks like a sweetener—cash for not asking questions: the £20 that is allegedly to be cut from domestic bills. It is a con—the political equivalent of the three-card trick. The £20 off—the 8 per cent. reduction in electricity prices—has been trumpeted by the Tory party and held up in the private Tory party briefing for Conservative Members as the major argument for the privatisation. That sweetener has nothing to do with privatisation. Ending the fossil fuel levy has nothing to do—

Mr. Phil Gallie: Will the hon. Gentleman give way?

Mr. Robertson: How can I resist the hon. Gentleman?

Mr. Gallie: Does the hon. Gentleman agree that nuclear engineering and nuclear generation are desirable? If they are, does he believe that there should be another nuclear power station built in the United Kingdom? If he believes that, could he suggest a cost for it and say whether a Labour Government would ever find the cash to supply such a station?

Mr. Robertson: The hon. Gentleman might check what his own party is saying about the matter, as it happens to be the Government temporarily. The privatisation reveals that there will be no more public finance in order to build nuclear power stations. The Government are ending the nuclear build programme. It appears that the Whips and the Scottish Office Ministers have spoken to the hon. Gentleman who rebelled a couple of weeks ago in Scotland—perhaps he rebels all the time now—and, as a consequence, he is crawling around attempting to support a case that he knows deep down is not worth sustaining.
Ending the fossil fuel levy has nothing to do with flogging off the nuclear reactors of Britain to whoever wants to buy them. It is a cynical and serious matter to deceive the electorate by pretending that it is largesse resulting from privatisation. Perhaps the Secretary of State for Scotland will confirm whether the 8 per cent. price reduction and the £20 that the Government claim will be cut from electricity bills could have been achieved while retaining the nuclear industry within the public sector.
Will the Secretary of State concede that point? I shall give way to allow him to answer that relatively simple question. Could not those price cuts—that sweetener—have been made without privatisation? I shall give way to allow the right hon. Gentleman to answer that simple and important question. Will he tell the House and the country the answer? Is he not able to tell us; does he not know the answer? Is it not a fact that, if he stood at the Dispatch Box, he would be forced to admit that the sweetener has nothing to do with privatising the nuclear power industry but has to do with a fossil fuel levy that could have been cut off at any point? By his silence, the Secretary of State reveals the weakness of the Government's case. We can draw only one conclusion from his silence.

Dr. Michael Clark: Perhaps I could attempt to assist the hon. Gentleman by answering the question that he has put several times. He will know that the nuclear levy has been withdrawn because the liberalised and semi-privatised nuclear industry, which has been run very effectively as a separate company, has

raised enough cash to pay for decommissioning the nuclear power stations in due course. The next step is to privatise them so that they will become even more efficient and effective. The money has been raised by the efficient working of the nuclear industry since the initial privatisation took place.

Mr. Robertson: The hon. Gentleman is normally authoritative about these matters, and I admire his courage in wandering into the firing line when a member of the Cabinet sits rooted to his seat when confronted with that relatively simple question. However, there is no evidence to suggest that the hon. Gentleman is correct. Last Wednesday, the Financial Times made exactly that point in an analysis which was cruel from the Government's point of view. It said:
unless the government can come up with a convincing explanation of how the money will be found, the assumption must be that the cost"—
of decommissioning—after all, that is what the nuclear component of the fossil fuel levy was all about—
will ultimately fall on the taxpayer".
The reality is that the Government are going to privatise the nuclear power industry and quite separately—it is irrelevant to the privatisation process—are going to cut off one part of the fossil fuel levy and give the people their money back as a free gift.

Dr. Robert Spink: Will the hon. Gentleman give way?

Mr. Robertson: No, I shall make some progress.
The Government intend to bribe the people with their own money, which was to go towards paying the vast and indeterminate costs of decommissioning Britain's power stations. As the Financial Times correctly points out, that money will have to be raised from the next generation of taxpayers. As usual, the taxpayers will suffer as the new shareholders get a bargain.
The Government's nuclear sums simply do not add up. The Government claim that the Magnox liabilities for Scottish Nuclear and Nuclear Electric amount to £8.5 billion. Will the Secretary of State confirm that that is less than the combined total worth of the two companies as is stated in their annual reports? How does he explain the discrepancy between the Government's figure and what is in the annual reports? What piece of creative accountancy can justify that discrepancy? Will he make available to the House a full detailed breakdown of the Government's new estimates so that hon. Members can decide for themselves?

Dr. Spink: Is the hon. Gentleman aware that the first phase of decommissioning the Berkeley Magnox plant has been completed and that it cost one third less than was estimated? Other research shows that the decommissioning costs will be much lower than assumed initially. Will the hon. Gentleman acknowledge those facts?

Mr. Robertson: The hon. Gentleman uses one example to make one point, but there are plenty of other examples. The industry experts know that the decommissioning costs will be much greater than the Government estimate. If the Government are willing to publish the details in full, perhaps Opposition Members will be persuaded by the Government's argument.
On the basis of the Government's own figures, £5.9 billion has been raised so far to meet the liabilities. Will the Secretary of State confirm that, even according to the Government's published figures, a £2.6 billion funding gap remains? Will he confirm also that even the £5.9 billion figure includes speculative projected savings of 10 per cent. in Magnox liability costs that may or may not materialise? If they do not, the gap in the Government's nuclear sums will increase to £3.5 billion.
There is no guarantee that the Government will raise even that amount from privatisation. Some of the estimates that we have seen so far have been as low as £2 billion. Even if all the cash raised from privatisation were put aside to pay for decommissioning, there is no guarantee that it would meet the full minimum costs of the Magnox liabilities. Of course, it will not be put aside for decommissioning; it will be used to pay for tax bribes to save a dying Government.
Once again, future generations will be forced to clean up the mess that is left by the Government. The public will pay twice because the money that was supposed to pay for decommissioning was spent instead on Sizewell B and the income from Sizewell B that was supposed to help to finance the liabilities of the Magnox plants will be hived off. In other words, the private shareholders will get the assets and the taxpayers will get all the liabilities and they will pay twice. That is some deal for the taxpayers.
Although much attention has correctly been focused on the Magnox liabilities, I would like to pursue the Secretary of State—if he ever decides to answer a question—on the issue of the other liabilities that the private sector will have to accept. Perhaps he is currently being briefed about my first question. It seems pointless to ask questions of him if he does not even bother to listen to them.
What guarantees can the Government give that the taxpayers might not in future have to foot the bill for decommissioning Britain's advanced gas-cooled reactors and pressurised water reactors? Given the difficulty of quantifying decommissioning costs, does the Secretary of State expect the private sector to accept such massive, open-ended liabilities? Of course he does not; no one does.
The Financial Times said:
The City is likely to demand a premium for investing in nuclear power … Investors will want reassurance about the liabilities for clean-up costs.
Of course, the implicit deal is that the public will get stuck with the bill. The financial risks involved in investing in the nuclear industry will be massive. If the operators are persuaded to buy the industry, frankly, it will have to be at car boot sale prices, and a boot sale bargain is precisely what it will be. The new Sizewell B reactor cost almost £3 billion to complete, so, in effect, investors in the nuclear power industry are buying into a new holding company and they will get the other seven reactors for free—eight nuclear reactors for the price of one. Once again, the bottom line is that the Government are selling off public assets at a massive discount to the City and a massive loss to the country.
What happens if the privatised company falls into financial difficulty? After all, it will not be just any old company. It cannot board up the windows of nuclear power stations and put up a "To Let" sign. We are talking about nuclear reactors. If the privatised company does not make sufficient provision for decommissioning, the taxpayer will have to pick up the tab as a last resort. Will the Secretary of State for Scotland tell us tonight that that is not true and that, in the deep recesses of the future, the decommissioning costs will be picked up by the private buyers?
It is no use the Government saying that a segregated fund for decommissioning will do the trick. A private company, whose entire raison d'être is to maximise returns to shareholders, will not want to set aside money for decommissioning. Heaven knows, the short-termism in the City of London is such that most investors are concerned with the next five to 10 years at most, never mind liabilities that may arise 100 years down the line. What real incentive will a private company have to put aside the necessary money?
Of course, nobody knows what the final bill will be. In respect of Sizewell B, for example, nobody has ever decommissioned a pressurised water reactor before. How do we know how much it will cost to decommission Sizewell B? The answer is that we do not know. However, we know that Scottish Nuclear is budgeting £10 million this year alone to start decommissioning Hunterston A in Ayrshire.
We do not even know how the Government plan to dispose of old stations and their waste because Ministers have swept the issue under the carpet until after privatisation. What else will be swept under the carpet? What other rabbits will the President of the Board of Trade pull out of his hat once the shares have been sold? What guarantees do investors have that they will not be sold another false prospectus by the Government? Investors know that it has happened before and they have a right to know now what the prospectus will be. Far from offering the nuclear industry a bright future, nuclear privatisation is just another way for the Government to further absolve themselves of the responsibility for Britain's long-term energy needs.
Ministers are quick enough to criticise Labour for refusing to invest in new nuclear power stations, but I say to the hon. Member for Ayr (Mr. Gallie), who should know better—perhaps he was put up to ask the question—that the Government are not prepared to invest in new generating capacity either; they are not prepared to put their money where their mouth is.
The inevitable consequence is that any privatised nuclear company unable to find money for a new nuclear power station will want to diversify into gas-fired generation. Everybody says it and everybody knows it. The Times put it succinctly last Wednesday:
That could mean that a private nuclear industry would by slow degree cease to be nuclear at all.
What future is that for the nuclear industry or, for that matter, for the coal industry that was decimated by the previous dash for gas? Do not Ministers care at all about the long-term mix of energy resources?
Roger Hayes, director-general of the British Nuclear Forum, said:
It is … unfortunate that the Government appears to believe our energy needs can be left entirely to that the short-termism of market forces. They cannot.


The same free market in energy that brought about the dash for gas and ruined the coal industry will wreck the nuclear industry, too. What will that do for investment, research and development and jobs?

Mr. Matthew Taylor: I understand the criticisms that the hon. Gentleman is making of the Government's position on the long-term future of the nuclear industry, but I do not understand them in the context of the Labour party's manifesto commitment not to build new nuclear power stations and the environmental policy document published just today which makes the same statement.

Mr. Robertson: If the hon. Gentleman is confessing that he does not understand, I am stating that the Government's position is being undermined by their own policies. The Labour party has made its position absolutely clear in regard to the need for a long-term mix in the energy needs of the country.
I return to the crucial issue of jobs. Some 70,000 jobs have been lost in the gas, water and electricity industries in Britain since privatisation, so why should the nuclear industry be any different? Why should it expect anything different from privatisation?
The Conservative party briefing for Back Benchers, which no doubt we shall hear repeated to the House this evening, is careful and economic with the language it uses in respect of jobs. It says:
Privatisation will offer new opportunities for staff and management, and is expected to create at least 100 extra jobs in Scotland.
That is a critical argument. There will be no extra jobs anywhere else and jobs will be created in Scotland by a paper transfer across the border. That is just another promise in line with other promises that have been made and betrayed in the past.
The privatisation bears all the hallmarks of previous sell-offs. If it goes ahead, we can expect a rerun of what happened in all the other privatised utilities—massive job losses, huge price increases and directors making themselves obscenely rich at the expense of the consumer.
Privatisation simply is not needed to make the nuclear industry more efficient. After all, Ministers spent the past five years telling us that it was already the very model of efficiency. At the time of the coal review, they never tired of telling us about the improvements in productivity that had taken place, and that is confirmed in the White Paper. Profits are up, productivity is up and costs are down. If the nuclear industry can improve efficiency so dramatically in the public sector, why is there any need to privatise it? If it ain't broke, why are they trying to fix it?
How can privatisation possibly enhance competition when more than a quarter of Britain's electricity generating capacity will be in the hands of one company and when the other two generators and generating companies in England and Wales—National Power and PowerGen—are asked to divest themselves of significant generating capacity?
The regulator himself argued against the creation of a large nuclear monolith. He also expressed concern that Nuclear Electric's current market power
may have restricted choice and increased prices.
Why are the Government giving it even more market power when even the Electricity Consumers Council says that customers have been massively overcharged for their

electricity since privatisation? How will less competition benefit the consumer? Given that the combined company will account for 23 per cent. of electricity generation in the United Kingdom, how can the Secretary of State—I hope that he will take note of this and return to it in his speech—and the Government guarantee that any flotation would not be affected by a possible reference to the Monopolies and Mergers Commission in future?
The shotgun wedding of Nuclear Electric and Scottish Nuclear has nothing to do with the future of the Scottish nuclear industry, and everyone north of the border knows that. It has everything to do with raising as much cash as possible as quickly as possible to plug the gap in the Treasury coffers.
Ministers' claims that the merged company will be able to compete on the world stage simply do not hold water. Adding Scottish Nuclear's two AGRs still leaves the combined company nowhere near the size of Electricité de France, one of its chief rivals. Most experts agree that the key to winning overseas orders is not size but reactor design and a track record in running the reactor type in question. How, then, will adding two AGRs to its generating capacity help Nuclear Electric to win any Taiwanese PWR deal?
The nuclear fusion of Nuclear Electric and Scottish Nuclear is a shoddy betrayal of Scotland's interests. Government guarantees are little more than a cruel confidence trick designed to buy off yet another Tory Back-Bench revolt. Only half the number in revolt is here this evening, and that might even be on the generous side.
While the Scottish Office spin doctors—there seem to be rather a lot of them—have been trumpeting the jobs as a triumph for the Secretary of State for Scotland, the press release from Scottish Nuclear said it all:
Scottish Nuclear welcomes the decision if it secures future jobs in Scotland.
That is a mighty important "if. Scottish Nuclear is right to be sceptical. After the previous experience of those of us in Scotland of Britoil and the Guinness takeover of Distillers, that if is a pretty big and important "if."
It is therefore no surprise that Sir Donald Miller, hardly the friend of the left in Scottish politics, the former chairman of the South of Scotland electricity board and Scottish Power, described the new brass plate destined for somewhere in Scotland as merely a sop and called the merger a breach of faith.
Do the Government not realise that paper guarantees are not good enough? Why should anyone in Scotland believe the Government's words? The Secretary of State for Scotland wrote to me last week about the triple lock of the establishment of the substantive headquarters in Scotland well in advance of privatisation, incorporation of the key features in the memorandum and articles of association and specific protection of those key features through special shares.
How many times in the past 16 years have we heard about the golden shares, the special shares, the locks, and how many of them are still intact today? None at all. No one in Scotland and no one in the rest of the country believes a word that the Government say.
Then there is the crucial and vital matter of safety. The publicly owned British nuclear industry has an excellent safety record—one of the best in the world. That is a tribute to the management and work force as well as to the fine work of the nuclear installations inspectorate.
Why, then, should Britain want to jeopardise that record with these dangerous plans? Not only is there a conflict between short-term private profit and the long-term interests of public safety and the environment but there is a real concern that the inspectorate is not properly equipped to regulate a privately owned nuclear industry.
We must recognise that there are substantial costs relating to the regulation of nuclear safety. In the United Kingdom, safety is clearly the responsibility of the nuclear operator. In essence, the onus is on the operator to prove the safety case to a small specialist staff.
In the United States, where the industry is largely in private hands, the demands of the private sector shareholders have ensured that the nuclear utilities take the view that safety is not their responsibility and that regulation is not for them but for the regulator. As a consequence, the American equivalent of the nuclear installations inspectorate is large, bureaucratic and expensive. That expense will have to be borne by the taxpayer if we go down the American route of a privatised industry.
I give this warning now: if the industry is privatised, we will put in place the toughest, strongest, most stringent nuclear safety regime to be found in the world.

The Secretary of State for Scotland (Mr. Ian Lang): We have that now.

Mr. Robertson: Yes, we have, and there are precious few people in the country who believe for a moment that in order to get rid of the industry on the private market there will not be a weakening in the safety regime. No one believes that. I am simply making it clear that we will put in place the toughest regime that is possible here. Given the apprehensions that exist about nuclear power stations in the private sector, that is a commitment that should be noticed by the public and by the market.
This is the most ill-conceived privatisation of all. It is unwanted and unnecessary. Once again, public assets will be sold, probably at a knock-down price, and while the shareholders and directors of the new company my make themselves rich on the profits, the consumer and the taxpayer will be forced to pick up the tab in the end.
The Government's guarantees about the future of Scottish Nuclear are no more than a fraudulent fig leaf. I urge the hon. Member for Ayr, since he appears to be the only one of the former rebels who is now even interested, to be serious about the whole question of Scottish jobs and a great Scottish company, and not to be bought off with such cheap promises. I invite him to join us in the Lobby tonight and to take a stand for sense, safety and efficiency in this unique and most important of industries.

The Secretary of State for Scotland (Mr. Ian Lang): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
welcomes the outcome of the Government's Nuclear Review; applauds the improvements in performance by the nuclear generators since the privatisation of the rest of the electricity supply industry, including the reduction of decommissioning costs achieved so far; welcomes the proposals for more cost-effective management of Magnox liabilities; welcomes the Government's decision to privatise the industry's seven AGR stations and one PWR station during the course of 1996; endorses the decision to create a holding

company, with its headquarters located in Scotland, with the parts of Nuclear Electric and Scottish Nuclear that are to be privatised as its wholly owned subsidiaries; notes that safety will continue to be of paramount importance when the industry is in the private sector; and applauds the benefits to consumers in terms of lower electricity prices which the early end to the nuclear element of the fossil fuel levy in England and Wales and to the premium price in the Nuclear Energy Agreement in Scotland will bring.".
I listened with great interest and even greater curiosity as the hon. Member for Hamilton (Mr. Robertson) poured forth about the future of our nuclear industry. The bogus nature of the sentiments that he expressed and the inherently fraudulent prospectus for the future of the nuclear industry that he offered the House will become clear if I remind the House of the manifesto on which he and his colleagues fought the last general election. It said:
We will not invest in new nuclear power stations … or extend the lives of existing nuclear stations beyond their safe lifespan. Britain's dependence on nuclear power will therefore steadily diminish.
That is the reality of the twilight world of decline and decay, with jobs and technology withering and disappearing, to which the Opposition stand committed.
Nor have the Opposition changed their view since then. The hon. Member for Clackmannan (Mr. O'Neill), whom I see in his seat, Labour's energy spokesman, speaking earlier this year, said:
Labour's position remains as it was at the last general election.
Therefore, a public sector nuclear industry would know exactly what to expect from a Labour Government: decline and decay leading to demise.

Mr. Andrew Miller: Will the Secretary of State give way?

Mr. Lang: Yes. Perhaps the hon. Gentleman will recant on behalf of his party.

Mr. Miller: The right hon. Gentleman will know my position on nuclear power. Will he be specific and tell the House how many jobs there are now in the nuclear industry and how many there were, say, 10 years ago? Is it not true that there has been a rapid decline in the number of real jobs in the industry and that that is all down to the Government's failure to develop a proper energy policy?

Mr. Lang: There has been a rapid improvement in productivity and efficiency in the industry, which has enabled costs to come down and privatisation to be contemplated. Under the Opposition, however, there will ultimately be no jobs at all in the industry, and that should concern the hon. Gentleman.
The only thing that was clear from the speech made by the hon. Member for Hamilton was that Labour has not abandoned its knee-jerk reaction to every privatisation ever proposed, even though it claims to have abandoned clause IV. I say "claims" because the very day after voting to abandon clause IV in Scotland, Labour's Scottish conference voted to nationalise every single public utility. Does that extend, one wonders, to the privatised nuclear industry? Or would that be the only public utility in Scotland that Labour would not renationalise? I listened throughout the 31 minutes for which the hon. Gentleman


spoke to hear that commitment. Perhaps he would like to clarify the position now. I will gladly give way to him if he would like to do so.

The Minister for Industry and Energy (Mr. Tim Eggar): Sit down and give him a try.

Mr. Lang: The hon. Member for Cunninghame, North (Mr. Wilson) will have another opportunity. Perhaps the Opposition would like to think about it for a little while.
The Government's decisions on the nuclear generating industry were announced by my right hon. Friend the President of the Board of Trade on 9 May 1995, and I welcome the opportunity to explain them once again. Indeed, I wonder whether the hon. Member for Hamilton listened to anything that was said that day. The proposals were unalloyed good news for the industry and its employees, for the taxpayer and for electricity consumers. Unlike the Labour party's plans, they offer the industry a vibrant and enduring future, freed from the constraints of nationalised ownership.
Of course I understand that Opposition Members and the country at large want reassurance on safety—rightly so—and I am happy to give it. The nuclear generation industry in this country has an excellent safety record. I assure the House, as my right hon. Friend the President of the Board of Trade did at the time of his statement, that safety has been a paramount consideration throughout the nuclear review. Our commitment to safety will not be diminished or compromised when the industry is privatised. We shall continue to have, in the public sector, the robust and vigorous safety standards and disciplines for which the country is rightly renowned.
It is irresponsible for the Labour party or other commentators to suggest that the privatised industry will be anything other than totally committed to maintaining the excellent safety record already established by Nuclear Electric and Scottish Nuclear.

Mr. Tam Dalyell: Will the right hon. Gentleman give way?

Mr. Lang: I will give way, but perhaps I may finish the argument about safety first.
The Health and Safety Commission has advised that there is no reason to change the licensing and monitoring regime for nuclear sites in any fundamental way to deal with the new structure to be privatised. That regime will remain transparent, rigorous and robust. The Government will not permit any weakening of a regulatory regime or of the safety standards currently in force. The HSC worked with the Government in preparing its timetable. The HSC will continue its independent role as regulator. In that role it will carefully consider all proposals for relicensing consistent with the Government's proposed structure for the privatisation. So we have taken steps. Both public and private sector operators will continue to be subject to the same rigorous safety regime as now applies. Our commitment to that remains absolute.

Mr. Dalyell: The question that I asked the President of the Board of Trade on his statement was this: is there to be no member for safety on the main board, and will the safety establishment be at Peel park? Frankly, any idea of Scottish headquarters is not very convincing without a

clear indication that the safety headquarters and all that goes with it will be at the Scottish headquarters, which most of us would like to see at Peel park.

Mr. Lang: I give the hon. Gentleman the answer that my right hon. Friend the President of the Board of Trade gave him. That is a matter for the Health and Safety Executive and for the nuclear installations inspectorate and will no doubt be considered as they consider the various stages of progress towards privatisation. It is not a matter for the Government to lay down; it is a matter for the health and safety authorities to satisfy themselves on, and I am certain that they will do so.
It is clear, from the motion and from the speech of the hon. Member for Hamilton, that the Opposition like to live in the past. They are aware of no reason to move on from the perception of 1989, when the nuclear stations had to be excluded from privatisation because of anxiety that was in large part about the risks of those costs and liabilities increasing unpredictably.

Mr. John Sykes: rose—

Mr. Llew Smith: rose—

Mr. Lang: I give way to my hon. Friend the Member for Scarborough (Mr. Sykes).

Mr. Sykes: Before the Secretary of State leaves the issue of safety, is it not grossly irresponsible of Labour Members to prattle on about safety, as they have done time and again, in relation to every privatisation? I think especially of gas. We have never had to nationalise ICI, a leading chemical company in this country, because of safety problems. It has produced some very dangerous chemicals indeed, but it has proved extremely able to run itself without having to be nationalised. Is it not therefore grossly irresponsible of the Labour party to talk about safety in that way?

Mr. Lang: My hon. Friend is absolutely right and he makes the argument very well. There are a substantial number of private nuclear sites already licensed—licensed, in some cases, by the Labour party—in the United Kingdom. To imply that safety is in any way compromised or diminished as a result of the industry entering the private sector is completely wrong and misleading. I hope that the extensive comments that I have made this evening will reassure the House about that.

Mr. Llew Smith: rose—

Mr. Brian Wilson: rose—

Mr. Lang: No, I must move on as I want to mention costs and liabilities.

Mr. Wilson: Will the Secretary of State give way on safety?

Mr. Lang: I will on that point.

Mr. Wilson: The Secretary of State will appreciate that the nuclear installations inspectorate and Her Majesty's inspectorate of pollution have each said that it will take a minimum of 12 to 14 months to go through all the relicensing procedures. Will he give an absolute assurance that no pressure will be brought to bear to truncate that process and that if that time scale proves inadequate no political pressure will be brought to bear to stay within that time scale?
Will the Secretary of State address himself especially to the problem of the division of ownership within sites, which we have not had previously in this country, and which at Hunterston in my constituency, for instance, will give rise to new questions about the licensing procedures?

Mr. Lang: There is absolutely no question of the Government putting pressure on the Health and Safety Executive. It is outrageous that the hon. Gentleman should suggest that, and it is discourteous to all the safety and security organisations in the country to imply that they would be in the slightest way susceptible to such pressure.
On costs and liabilities, since 1989 uncertainties and risks surrounding the costs of decommissioning nuclear stations and managing spent fuel have in reality been substantially reduced. Experience in decommissioning has been going—

Mr. Llew Smith: Will the Secretary of State give way?

Mr. Lang: No, I should like to press on, if the hon. Gentleman will forgive me.
Experience in decommissioning has been gained at Berkeley and Hunterston A, which have both completed stage 1 of the decommissioning process ahead of schedule, and the work done so far has, as my hon. Friend the Member for Castle Point (Dr. Spink) said, been brought in at well below the estimated cost.
Moreover, both Nuclear Electric and Scottish Nuclear have agreed new fuel cycle contracts with British Nuclear Fuels plc. They are now in a much better position than they were in 1989 to demonstrate that the estimates that they have made of their long-term liabilities are robust. They have been making provision for their liabilities in a much more informed way.
Let me say a word about what Scottish Nuclear and Nuclear Electric have achieved since they were vested in 1990. Both companies have secured very substantial improvements in their financial and operational performance. Output has increased; costs have decreased. Productivity has very significantly increased. They should receive our congratulations on that. That success, driven in part by their ambition to be privatised, has facilitated the Government's decision to privatise the most modern nuclear stations.
Our decision to privatise the advanced gas-cooled reactor and pressurised water reactor power stations is therefore backed up, not only by the vastly improved performance of the AGRs but by reduction of uncertainty about long-term liabilities.

Mr. Adam Ingram: In terms of the achievements of Nuclear Electric and Scottish Nuclear, how would the Secretary of State tackle the issue of utilisation of those stations? Those stations are running at maximum capacity, to try to achieve the best terms pre-privatisation, with both companies wanting to achieve privatisation. If that utilisation rate continues, the life span of the nuclear stations will be considerably shortened.

Mr. Lang: The hon. Gentleman puts his finger on precisely the type of point that the management of those companies will need to take into account as they consider the future development of the company and the future employment of their assets. I am talking at the moment

about the liabilities associated with the stations to be privatised, and they will all be transferred to the private sector. It will be the Government's aim to ensure—

Mr. Alan W. Williams: rose—

Mr. Michael Clapham: rose—

Mr. Lang: I must make further progress.
It will be the Government's aim to ensure that the privatised companies meet their obligations in full. Specifically, they must make sufficient financial provision to meet their liabilities so that the costs of meeting them do not fall on the taxpayer by default. We believe that the setting up of segregated funds is the best way of ensuring public confidence that that will be so. We shall therefore discuss with the industry the detailed implications of setting up the segregated funds necessary.
Our decision to privatise the more modern stations does not mean that the Magnox stations have been ignored—far from it. The nuclear review identified opportunities for reducing the costs of discharging their liabilities, which potentially fall to the taxpayer. All the Magnox stations and all Magnox liabilities will be held by a single company, which will remain in the public sector. Its operating Magnox stations will meet about 8 per cent. of demand for electricity in England and Wales, thus creating a fourth major generator in that market. The company will also be responsible for decommissioning Berkeley and Hunterston A.
It is intended that that company will eventually be transferred to BNFL, and that will give a clear incentive to maximise revenue from generation by optimising the economic lives of the remaining stations and by minimising costs of Magnox reprocessing and decommissioning. We believe that very significant sums can be saved in that way.

Mr. Dafydd Wigley: Will the Secretary of State give way?

Mr. Lang: In a moment.
Substantial sums can be saved in that way, in addition to the money that will be earned from continuing to operate the stations.
We welcome the new long-term agreements between BNFL and the nuclear generators and their intention to improve arrangements for dealing with the various categories of Magnox liabilities.

Mr. Wigley: The Secretary of State will be aware of my interest from the point of view of the decommissioning of the Trawsfynydd power station in my constituency. In relation to the changes that he has described, will he give an assurance that if the professional scientific advice is that it would best to keep the structure as it is for 30 years, to allow the intensity of the radioactivity to decay, and thereafter to demolish it, nothing in his financial provisions will make that a less favoured option? Will the scientifically advisable option be adopted?

Mr. Lang: All options are open, but I will certainly give the hon. Gentleman the assurance that nothing would be done to compromise safety and that, obviously, such scientific advice would have to be taken seriously.
As a result of the arrangements that I have described, BNFL's key role in the UK nuclear industry will be enhanced. Once the transfer to it of the Magnox stations is complete, it will become a significant new generator, with about 8 per cent. of the market in England and Wales.
In addition, BNFL's key role as the primary provider of nuclear fuel cycle services will be enhanced. It is a leader in the international market for those services and in the nuclear transport market. The Government confirm that BNFL will continue to offer the full range of those services as long as the market continues to demand them. We recognise that a major challenge for BNFL is to develop its business in the overseas markets where growth is stronger and to win further long-term contracts. I hope that that will reassure staff at BNFL as to their important long-term future.
In all this, we have not forgotten the electricity consumer. Privatisation will provide a powerful incentive for the two subsidiary companies to benefit their customers by raising efficiency and reducing costs still further. Domestic electricity prices are lower in real terms, even after value added tax, than two years ago. Further reductions are in prospect. The price paid by industrial consumers of electricity has also fallen significantly since 1989.

Mr. Brian H. Donohoe: Will the Secretary of State give way?

Mr. Lang: If the hon. Gentleman will forgive me, I must make some further progress as I have a lot of information to lay before the House.
We are, however, taking such steps as are open to Government to accelerate and bring forward those benefits to consumers. In England and Wales, that part of the fossil fuel levy paid to Nuclear Electric will cease at privatisation. In Scotland, where domestic electricity prices are on average 3 per cent. lower than in England and Wales, the element of the premium price that Scottish Nuclear receives from its customers will also end then.
Those developments will result in further reductions in electricity prices both north and south of the border. The scale of the changes will be comparable—about 8 per cent. over the period—for all those who benefit. What we are doing is improving the efficiency of the industry and exerting further downward pressure on prices. That can only be good news for electricity consumers. It will help the industry to be more competitive. If Opposition Members had their way, consumers would be denied the benefits that privatisation will undoubtedly bring them.

Mr. George Robertson: rose—

Mr. Lang: If the hon. Gentleman is going to tell me that he will or will not renationalise the industry, I shall happily give way.

Mr. Robertson: As the Secretary of State found out this morning, we are not allowed to attach strings to interventions. May I bring the Secretary of State back to the question that I asked and that he refused to answer? He has put forward a bribe from the Dispatch Box this evening. Will he confirm that that reduction in price could have taken place without privatisation, yes or no?

Mr. Lang: The hon. Gentleman puts a question in a way that does not make sense. It is because we are

privatising the industry, changing its structure and enabling new management and new ownership to take over that the existing non-fossil fuel obligation and the existing nuclear energy agreement premium can be changed in that way and their termination can be brought forward, with the benefits to consumers that have already been described.
As the House is aware, the Government have decided to privatise Nuclear Electric and Scottish Nuclear as two wholly owned subsidiaries of a new holding company that will be located in Scotland. On 9 May, my right hon. Friend the President of the Board of Trade announced that the holding company will be responsible for all key functions for the group as a whole. As well as support for the holding company board, those functions will include the company secretariat, group finance, personnel, corporate communications and pensions administration. In addition, two separate subsidiaries, also based in Scotland, will handle international marketing for the group and the management of the segregated funds.
The new company is, as I said, to be headquartered in and run from Scotland. I am delighted to be able to announce that Mr. John Robb has agreed to serve as its chairman. He was a distinguished chairman of Wellcome. His strong links with Scotland will help to ensure that the holding company will exert real influence from its new base. The present chairmen of Scottish Nuclear and Nuclear Electric, James Hann and John Collier, have agreed to serve as deputy chairmen of the holding company. Executive directors will be appointed as soon as possible, and a non-executive director from each of the subsidiary companies will serve on the main board.
That structure provides a strong foundation for the new company's future. Sir Peter Middleton, chairman of Barclays de Zoete Wedd, has expressed his company's firm view that the structure will be perceived as both credible and workable by future investors and that, subject to normal financial considerations, potential exists for a successful flotation.

Several hon. Members: rose—

Mr. Lang: I shall not give way at the moment.
It is disappointing that the Opposition continue to snipe and to suggest that the new arrangements will not stick, particularly in Scotland—we heard it again from the hon. Member for Hamilton today. The structure that we are creating is designed to be permanent. Three separate mechanisms will interlock to ensure that that is so.
First, the headquarters structure, which I have just outlined, will be well established in advance of privatisation. Secondly, key features of its structure will be incorporated into the company's memorandum and articles of association. Thirdly, those parts of the memorandum and articles will be explicitly protected by a special share that I will hold jointly with my right hon. Friend the President of the Board of Trade.

Mr. Alex Salmond: May I test the Secretary of State's seriousness on the question of the special share? If he had held the golden share in Britoil in 1988, would he have exercised it to stop the takeover by BP, which subsequently resulted in the closure of the Glasgow office?

Mr. Lang: The analogy is totally inadequate because the circumstances were different and the precise purposes


of the share were different on that occasion. Indeed, the golden share had expired before a change in the circumstances took place that might have given rise to its being exercised.
What I have described will create a triple lock of the sort that I have mentioned. Last week, my right hon. Friend the President of the Board of Trade rightly called the arrangements a cast-iron guarantee for Scotland. It is evidence of the excellent deal that this represents for Scotland that Opposition Members have been reduced to claiming it is a transitory fig leaf. Had that been so, I would not have accepted the proposals.
Consistent with their enthusiasm for indulging in knocking copy, Scottish Members see only the scope for scaremongering. They worked hard during the nuclear review. First, they claimed that 300 jobs would be lost, then 400 and then the hon. Member for Hamilton even suggested that 1,000 jobs would be lost at East Kilbride. He may have impressed his colleagues on the Opposition Benches with the scale of that claim, but he forgot just one small thing—only 450 people are employed at East Kilbride.
The facts are that Scottish Nuclear and Nuclear Electric will continue as separate entities with their own boards. Their continued existence will be protected by separate special shares, of which the holder of my office will hold one—no doubt the hon. Gentleman still aspires to that—in Scottish Nuclear and the President of the Board of Trade the other in Nuclear Electric. The functions currently performed at East Kilbride by Scottish Nuclear will continue to be performed there. In addition, and once the nuclear installations inspectorate is satisfied with arrangements for the transfer, certain engineering functions within the two subsidiary companies will be reorganised to bring more jobs to Scotland. Overall, the new structure, far from leading to the loss of hundreds of jobs, as the Labour party claimed, will actually bring at least 100 jobs to Scotland.

Mr. Gallie: My right hon. Friend is just in his comments but he raised a slight concern with me. He has pointed out that, if the nation had an aberration and the lot opposite took control of the Government, the hon. Member for Hamilton (Mr. Robertson) might have control of the golden share. Will my right hon. Friend confirm that that golden share will last 10 years? If that is the case, we should have no cause for concern.

Mr. Lang: I assure my hon. Friend on a number of points. First, the special share is without a time limit but must last at least 10 years. Secondly, I hope that his anxiety will steel his resolve to work still harder to ensure, with me and my right hon. and hon. Friends, that the Labour party will never be in a position to exercise the golden share.
The proposals that we have announced are intended to secure and, indeed, to strengthen the future of the nuclear industry in this country. They will secure for it a bright, long-term future, freed from control from Whitehall and freed from the financial constraints of the public sector. Far from leading to the loss of control of an important Scottish company, they will preserve the identities of both existing companies and bring a major new company headquarters to Scotland. In private ownership, that company will be free to compete in domestic and overseas

markets. That is the context in which the new company will be able to make its own investment decisions. Those decisions will be based on commercial factors and not on the dead hand of the state. It opens the way for nuclear generation to compete for its future in the marketplace. Privatisation will be, for this industry as for so many others, the gateway to a bright and prosperous future.
Time and again over the years we have heard the Labour party whine and grumble about the Government's plans for privatisation. There have been countless scare stories, always disproved by subsequent events.
The hon. Member for Glasgow, Garscadden (Mr. Dewar)—I welcome him to our deliberations—started the ball rolling as long ago as 1979, when he claimed that British Airways
will be the pantomime horse of capitalism if it is anything at all."—[Official Report, 19 November 1979; Vol. 974, c. 125.]
Well, that horse has won the Grand National, the St. Leger, the Oaks and just about every other race around the world.

Mr. Thomas Graham: Has the Secretary of state consulted the workers in the industry? They are telling us loud and clear that they do not want their industry to be privatised. In my area we have big disused quarries and the local folk are concerned that there is a possibility that low-level radioactive waste could be dumped there, putting them under threat. I am not saying that the industry is unsafe, but the waste is a problem. Will that problem be dumped in my disused quarries?

Mr. Lang: The hon. Gentleman should get together with his hon. Friend the Member for Garscadden because they are both so out of touch. The hon. Member for Garscadden could be the front legs of the pantomime horse and the hon. Gentleman could just be himself.

Mr. Wilson: Will the Secretary of State give way?

Mr. Lang: No, I will not.
Next we had the claim that the privatisation of British Telecom would lead to the extinction of the public telephone box. The reality is that the number of BT call boxes has increased by over 50 per cent. since privatisation. Add to that over £1,000 invested for every household in the country and a 35 per cent. fall in average real prices and one gets the true picture of a successful privatisation.
Never one to miss stealing an idea or two, the right hon. Member for Sedgefield (Mr. Blair) had to get in on the act. I served on the Committee opposite the right hon. Gentleman when the Electricity Bill went through Parliament—at least I think I did; in fact, he was hardly ever there as he kept going out to brush his teeth ready to sparkle for the next sound bite. He said then:
it is barely an issue that prices will rise because of privatisation."—[Official Report, 12 December 1988; Vol.143, c. 684.]
In reality, the cost of domestic electricity has fallen by more than 8 per cent. in real terms in the past two years, more than cancelling out the additional cost of VAT.
Privatisation has benefited not just the consumers of these services but taxpayers as well. In 1979 nationalised industries cost the taxpayer around £50 million every week. Now, as privatised companies, they contribute around £50 million every week in taxes to the Exchequer. There is little doubt that the Opposition have been forced to ditch clause IV because of the success of the Government's


privatisation programme. However, their supposed conversion will remain skin deep until they actually support a privatisation. When will we ever see or hear from new or old Labour support for the transfer of any activity from the public to the private sector?
I am confident that our proposals for the privatisation of the nuclear generators will bring significant benefits to taxpayer and consumer alike. A great deal of detailed work needs to be done and we remain determined that the safety standards for which the industry is renowned should be rigorously maintained. We are determined to make the privatisation a great success. I urge the House to reject the motion and support the Government's amendment.

Mr. Adam Ingram: I enter the debate as a lifelong—that is probably an exaggeration—certainly a long-term supporter of the nuclear industry. I do not remember not supporting the industry. At one time I worked in the electricity supply industry. Also, I speak as the hon. Member for East Kilbride, which is the location of the headquarters of Scottish Nuclear, at which 300 direct staff are employed together with about 200 indirect staff. There is some variation in those figures depending on the number of indirect staff. As the Secretary of State said, there are about 450 jobs in total.
I believe firmly that nuclear energy has a vital role to play in the economy of this country. It offers a safe, reliable and effective source of energy. It is an industry with significant export potential, with a global market of £500 billion over the next 25 years. I genuinely believe that it offers diversity of supply in the context of a balanced energy policy—a policy that I have advocated for as long as I have been politically active in trade unions or the Labour party. Therefore, this is not the knee-jerk reaction of someone who is opposed to privatisation. I hope that my contribution will be considered against that background.
My considered view of the Government's proposals is that they are wrong for energy and the environment. They are bad for the consumer and the taxpayer and for those currently employed at the headquarters of Scottish Nuclear in East Kilbride. In the long term, they will be bad for many of those employed by Nuclear Electric. What is proposed in the White Paper is a wrong decision by a wrongheaded Government.

Mr. Gallie: Will the hon. Gentleman give way?

Mr. Ingram: The hon. Gentleman made several interventions during the Secretary of State's speech and he did not make many valid points then. He may get a chance to speak later if he catches Madam Speaker's eye.
The decision is wrong for energy because I do not believe for one moment that a privatised nuclear energy industry will build another nuclear station in this country. One needs only to look at the Government's White Paper—not the conclusions, but the analyses, which are ignored in the conclusions. Paragraph 4.24 says:
On the basis of the evidence presented to the review, the Government concludes that it is unlikely in current market conditions and at current gas prices, that Sizewell C"—
the next new nuclear power station to which reference has been made—
can provide a rate of return competitive with the main alternative, a CCGT station.

I believe that if we have a privatised nuclear energy industry in this country, it will opt not for nuclear power stations but for gas.
Paragraph 4.25 of the White Paper says:
The market will in the end be the judge.
So on the basis of current prices and rate of return, no nuclear station would be built. The choice would undoubtedly be gas.

Mr. Eggar: The hon. Gentleman has summarised the Government's White Paper. When he stood for Labour at the previous general election, did he specifically disclaim the Labour party's manifesto commitment, which said—I remind him of it—that the Labour party would not invest in new nuclear power stations?

Mr. Ingram: We should not be diverted from the central issue of the debate, but in any political party there are people with differing views. The Minister's party is riven from top to bottom on Europe. Many Conservative Members stood on a policy of no tax increases and no increases in VAT, yet the first thing the Government did was to implement those very policies as soon as they got into power. I hold firmly to my view on this. Many of my hon. Friends hold a similar view and many hold differing views. I hope that the debate within the Labour party will bring about a change in our energy policy. That is the democracy within the Labour party and I hope that my view will eventually prevail.
As I was saying, if the industry is privatised, it will not build a nuclear power station in the foreseeable future. I am glad that the Minister has accepted my analysis of the Government's White Paper.
I believe that if no new nuclear power station is built, that will have a major knock-on effect on not just the Scottish economy but the United Kingdom economy. There are many large-scale employers in the United Kingdom—Weirs of Cathcart and Babcock Power in Scotland alone are dependent on an expanding nuclear energy programme. If no nuclear stations are built, many thousands of jobs will be at risk. I believe that that will be the direct consequence of what is proposed in the White Paper.
I said in my opening remarks that the Government's decision was flawed and bad in environmental terms. The White Paper is entitled "The Prospects for Nuclear Power in the UK", but it ducks one of the central issues, which is that of the fuel route and what happens when a station is decommissioned. As I understand it, the Secretary of State for the Environment is not happy with the decision and said that the Government would defer the decision on the fuel route and decommissioning cycle for five years or more. That must be wrong. A White Paper that sets out to deal with the nuclear industry cannot ignore one of its fundamental aspects, that is, the decommissioning and downstream fuel route.
As my hon. Friend the Member for Hamilton (Mr. Robertson) said, I am sure that electricity consumers will not be conned by the £20 per annum reduction in their bills that they have been told will be the result of the levy being abandoned in England and Wales and the withdrawal of the nuclear energy agreement in Scotland. Not many consumers will read the Financial Times, but I think that they would agree with one of the points in its leading article the day after the Government's announcement. It stated:


the proposed privatisation of the UK's two nuclear generating companies is to be shaped by political pressures and the interests of future shareholders, not by the needs of electricity consumers.
That is an accurate statement. The leading article goes on to make many other trenchant criticisms of the White Paper.
Every year since electricity was privatised, electricity consumers have been paying approximately £1 billion by way of a levy, the purpose of which was, of course, to pay the decommissioning costs, although the total was never going to meet the full cost. However, the levy had to be imposed because the previous generator—the Central Electricity Generating Board—and the Government had not laid aside any of the money coming through the income stream for that purpose. The levy was therefore part of an historical cost and intended to meet part of the future costs.
In other words, consumers have been paying a heavy price for mistakes made in energy production and a heavy price for electricity privatisation, too. They will not be conned. They know what the Government are up to. The reduction in their bills is a small sop—£20 per annum— and it will not convince them to come on side.
Although the consumer will lose out, in the longer term the taxpayer will also be financially clobbered if privatisation goes ahead. It is clear that the underlying purpose of the privatisation proposals is to provide short-term cash for tax bribes. Every independent commentator identifies that as the case and has criticised the Government's proposals accordingly. Only the Government and their supporters are arguing that the reduction is anything other than a way of generating short-term cash for tax bribes.
The problem is that, in the longer term, taxpayers will have to pay the consequences of those bribes. There will be a sizeable debt to pick up. Taxpayers will have to underwrite the decommissioning costs not only of the nuclear stations that remain in the public sector but probably of those that enter the private sector.
In summing up, will the Minister consider what will happen if the privatised company goes bust? If two or three nuclear stations have to close because of the tight regulatory regime, there will be no income and the insurance bond will not pay the decommissioning costs. Who will pay them? It will be not the private sector but the taxpayers. At the same time, taxpayers will have to pick up sizeable decommissioning costs because of the Magnox stations that remain in the public sector.

Mr. Piers Merchant: rose—

Mr. Ingram: I should like to give way, but time is short and other hon. Members wish to speak.
I deal finally with those who are currently employed in the industry. It should come as no surprise to the Minister, the Secretary of State or, I hope, Conservative Members in general, that the overwhelming majority of those employed by Scottish Nuclear and, I suspect, a large number of those employed by Nuclear Electric, are opposed to the proposals for the holding company and the merger of the two companies.
Will the Minister say something about the guarantee that has been given in relation to the corporate headquarters? I asked the President of the Board of Trade

about that when he presented the White Paper, but I did not get a satisfactory answer. I hope that the Minister will provide one. Will the same guarantee be given to those currently employed at Scottish Nuclear headquarters and those currently employed at Nuclear Electric? Will there be a 10-year minimum guarantee of job security for them, just as there is in relation to the jobs that have been transferred to the corporate headquarters?
The fundamental reason why those employed by Scottish Nuclear do not accept the Government's proposals is that they know that the merged company will not make good economic sense. Which company in this country has a corporate headquarters and two separate operating headquarters, with all the duplication of administration, the cost of maintaining pensions for all the staff and the other support costs associated with it?
There may be 100 jobs to be moved around the country, but the reality is that there will be a consolidation of jobs and, therefore, job losses. This year alone another 65 jobs are to be cut at Scottish Nuclear so, although 100 jobs may be coming, there has already been a massive reduction in jobs. Employees do not believe a word that the Government say. They do not accept any of the guarantees that the Government maintain will be delivered, as announced by the Secretary of State.
If a privatised company says that it wants to close one of its operating headquarters because it is not generating enough income as one or two stations are not being utilised to the full, or because one or two have had to be closed as they are cracking and the safety regime insists on it, I do not think that the Secretary of State or the President of the Board of Trade will tell the holding company to keep the two operating headquarters open. If the company can save millions of pounds by closing one of them, so be it.
That is the reality facing the work force at Scottish Nuclear, which is why it does not accept the proposals and why I hope that the House will support the Labour motion.

Dr. Michael Clark: I am pleased to be able to follow the hon. Member for East Kilbride (Mr. Ingram). He and I served together on the Select Committee on Trade and Industry for some time and discussed nuclear matters privately on several occasions.
I welcome the Government's proposals to privatise the advanced gas-cooled reactors and the pressurised water reactor. That is in contrast to a speech mat I made in the House on 12 December 1988, when I spoke strongly against privatising the nuclear industry along with the rest of the electricity industry of that time.
The reason why I spoke against nuclear privatisation just over six years ago was, first, that the cost of decommissioning was not clearly known. Secondly, I wished us to maintain a sizeable nuclear industry and I could not be certain that, if the nuclear industry had been privatised then, we would have maintained the percentage of nuclear generation that I thought right for this country.
Thirdly, I thought it right to take the nuclear element out of the privatisation so that we could obtain the best possible price for National Power and PowerGen. Fourthly, I wanted to maintain a centre of excellence in the nuclear industry in Scotland and, indeed, in Britain in the constituency of my hon. Friend the Member for Gloucester (Mr. French).
Fifthly, I thought that it was right and proper that we should try to identify the true costs of nuclear energy before we ever absorbed nuclear energy into another large power-generating company or, indeed, privatised it at that time. Finally, and perhaps most important of all, I thought that there was still some public concern about safety and that until the public were confident about nuclear safety, it would not be appropriate to put the nuclear industry into the private sector.
I recall that on the same evening my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) made a similar speech with similar conclusions. However, both he and I were ignored—our conclusions were ignored at least—and it was decided that the nuclear industry would be privatised along with all coal, gas and oil-fired power stations.
Several months later, a new Secretary of State pulled out the nuclear element from the privatisation, justifying—I think—the stance that my hon. Friend the Member for Bedfordshire, North and myself had taken. As a result of including the nuclear power stations in the initial privatisation plan, however, we were left with one power company, National Power, which was larger than it otherwise would have been. It was made large so that it would be able to accommodate the nuclear element designed to go with it. With a large, conventional generating capacity, it would have adequate cash flow and sufficient profits to be able to counter the nuclear side, which would be less profitable, indeed, probably unprofitable. Having decided rather belatedly not to privatise the nuclear side, we had a skew in the size of our power-generating companies: an over-large National Power and probably the right size for PowerGen.
The hesitation that I had just over six years ago has gone. Decommissioning costs are known and we have the technology to decommission nuclear power stations. In any event, the Magnox stations are outside the privatisation proposal. They will be decommissioned within a separate company, as the Secretary of State for Scotland made clear in his opening speech. Nuclear power generation is now very efficient and represents between 20 and 25 per cent. of electricity generated in England, and a far higher percentage—almost 50 per cent.—in Scotland. National Power and PowerGen were sold at a satisfactory price and are operating very well. We have centres of excellence for research and development, where we can develop operating techniques and maintain and develop the skills of work forces. Indeed, we have centres that are also capable of providing training for operatives and employees at two locations, in Gloucester and East Kilbride.

Mr. Dalyell: As the hon. Gentleman knows a great deal about this subject, is he relaxed about the idea that the key safety core of Nuclear Electric should move, as it would have to, to a new headquarters in Scotland?

Dr. Clark: I wonder whether the hon. Gentleman would be kind enough to allow me to address that point in due course, because I shall argue in a moment that it should not move to Scotland, which would answer his question. On the intervention that the hon. Gentleman made earlier about the need for a director of safety, of course we want someone—

Mr. Dalyell: On the holding board.

Dr. Clark: On the holding board, indeed. I am sure that the hon. Gentleman will agree, however, that for

something as important as safety, no employee, whether he be the most lowly sweeper or the production or finance director, can ever say, "I will not take note of safety because there is a safety director who does it all." Safety, as we all know if we have worked in industry, is a responsibility for every one of us at every stage in the hierarchy. There is nothing wrong with the belt and braces approach of the hon. Gentleman's proposal for a safety director, but a safety director does not absolve any employee from safety consciousness in all that he or she does in the place of employment.
Before the hon. Member for Linlithgow (Mr. Dalyell) intervened, I was saying that we now have transparency of nuclear costs that was not apparent six years ago. Therefore, my right hon. Friends the Secretary of State for Scotland and the Minister for Industry and Energy have been able to propose that we remove the nuclear levy at the same time as proposing privatisation.

Mr. Alan W. Williams: I accept that in the past five years the nuclear industry has become much more economic, but the hon. Gentleman must acknowledge that nuclear power stations operate at a distinct advantage because they have a guaranteed base load provision and therefore a guaranteed market for their product. Does he think that that would be fair in a privatised industry, where it should compete with National Power and PowerGen? Does he, as I would assume, think that access to that regular, guaranteed market constitutes unfair competition?

Dr. Clark: There is a base load offer to nuclear power stations at the moment, as the hon. Gentleman rightly said. I am not entirely sure what is proposed for the private sector. I would hope that as far as possible we would have true competition in the private sector, in which case market forces would operate and nuclear power would have to compete in the same way as any other power. I do not know what is being proposed. The hon. Gentleman asked me what I would like to happen and I have told him.
I was talking about safety. There is now far greater public confidence in the safety of nuclear power stations. I believe that that has been achieved largely by publicity, openness, visits to nuclear power stations and, indeed, the performance of the power stations themselves. Since the criteria that I put forward in 1988 against the privatisation of nuclear power stations have been removed, it is only natural that I should welcome proposals to privatise the nuclear element—the AGRs and the PWR—and, at the same time, as has already been said, get rid of the nuclear levy.
If we privatise as one large company—I come now to the point made by the hon. Member for Linlithgow—we shall have three principal generators in this country. I know that there are other smaller generators as well. There will be PowerGen, which is probably about the right size, and National Power, which I have already said is larger than it would have been, had other plans been drawn up initially, rather than the plans to include nuclear power stations. Indeed, National Power is already so large that a reference to the Monopolies and Mergers Commission was considered at one time. There is still a possibility that it will be referred to the MMC at some future date.
One such large nuclear electric company would undoubtedly—I agree with the hon. Member for East Kilbride—expand into combined cycle gas turbine power


generation. Even if it did not expand that way, it would expand into another nuclear power station. The one thing on which we all agree is that it will expand, whether into gas or nuclear or whether it buys some of the surplus coal-fired generating capacity from PowerGen or National Power. If that one large company expands, it will become almost as large as National Power and we shall have two giants and one medium-sized company, which will reduce competition.
My right hon. and hon. Friends on the Front Bench should think again about having one large company. I suggest that they consider two companies: the north and south option, not necessarily one Scottish and one English company, but what is called by some the "for and for" option. That would increase competition. It would mean that we could avoid references to the Monopolies and Mergers Commission in future. We got it wrong in 1989 and had to correct it. Do not let us get it wrong now so that we have to correct it in future when the company is referred to the MMC.
Finally, if we have just one company with its headquarters in East Kilbride, we shall please neither Scottish Nuclear, which wishes to remain an individual company, nor Nuclear Electric, which wishes to keep its headquarters in Gloucestershire and not move to Scotland. If we had two companies, we could please both the existing companies and probably most of the employees, and we could maintain and perhaps even increase competition.

Mr. Matthew Taylor: The Liberal Democrats' position on this issue is clear. We oppose privatisation of the nuclear industry. We have from time to time supported the Government on privatisation and competition measures, such as the changes to British Gas, so we oppose the measure from a perspective not of outright opposition to change but of what is best for the taxpayer and for the environment.
We have heard more than once tonight about the other occasion when the Government, under the previous Prime Minister, considered privatising the nuclear industry. They abandoned that sell-off because
nuclear power—although in private hands—would have remained effectively in the public sector".
Today, the same Government propose to sell the profitable parts of the industry but to leave the liabilities in the public sector—in effect acknowledging the reason given for not privatising it last time, but coming to a slightly different conclusion and making what they are doing more apparent.
According to the same criteria, I believe that the Government were right the first time and that they are wrong now. The previous attempt at privatisation clarified what had always until then been denied by the nuclear sector—that it was not profitable and could not compete with other forms of power generation, despite having originally been proposed as the cheap form of power for the future. The extraordinary fact is that now, similarly, in the present Government document and plans, we see the clarification of the fact that for the foreseeable future,

even according to the Government, nuclear power stations cannot be built, because they cannot possibly generate a sufficient rate of return to allow them to be competitive.
In effect that announces, in any circumstances that we or the Government can foresee, the gradual phasing-out and the end of the nuclear industry. It has changed from being a developing industry building new power stations to one that manages the results of mistaken decisions on previous investment and waste problems.

Mr. Gallie: Will the hon. Gentleman give way?

Mr. Taylor: I shall make some progress, and then give way to the hon. Gentleman.
The White Paper makes it clear that nuclear power is economically unviable. Indeed, it confirms that the private sector will not build new power stations. Nuclear Electric itself concedes, on purely commercial criteria and given current market conditions, that new nuclear capacity is not competitive with conventional generating stations, so new stations would be unviable. Investment in new nuclear plant would not be justified.
The truth is that, under privatisation, investment in the industry is coming to an end for the foreseeable future.

Mr. Merchant: Will the hon. Gentleman give way?

Mr. Taylor: I shall do so in a moment.
Indeed, the French nuclear industry has effectively confirmed that verdict by making it clear in reports issued in the past week that it will not invest in the British nuclear privatisation because it believes that without Government support the industry is in steady decline.

Mr. Gallie: Section 4.49 of the report that we are discussing contains a different conclusion on the prospects for building new nuclear generating stations. It seems to me that there is no chance of such a station being built in the public sector, but that, according to investigations that Nuclear Electric is pursuing, there may be hope that that will come about in the private sector.

Mr. Taylor: The hon. Gentleman speaks more from hope than from experience, and that is not the conclusion in the document. When the Minister made the statement announcing the policy he conceded that what I have said is correct. Of course he held out the possibility that things might change at some indefinite point in the future that could not be foreseen, but I do not believe that that will happen. Ironically, as policy stands and as things are now, a Conservative Government are to all intents and purposes phasing out the nuclear industry.
Indeed, it is common knowledge—although no public announcement has been made—that the nuclear industry is considering investing in non-nuclear generating capacity and taking part in the dash for gas. So much for the nuclear industry's confidence in its own future.
Amazingly, in view of past history, the Conservative party has announced decisions that will inevitably lead to a cessation of nuclear generation in this country, and to the conversion of the nuclear industry to one that manages waste. Of course, there is the potential for an important role in doing the same for eastern Europe and other parts of the world, so this is not necessarily the end of jobs in the sector, but it is a big change.
The other irony is that the Labour party now seems most confused about what it wants for the future of the nuclear industry. The Labour Members who are here


represent a fair selection of those who support the nuclear industry within that party. We do not see many members of the environmental lobby within the Labour party, which is committed to phasing out the power stations.
It is unsurprising, therefore, that when I or Conservative Members have questioned Labour Members, they managed comprehensively to avoid giving a proper answer to the question whether the Labour party planned to phase out the nuclear industry, as had been stated, or whether it meant to keep it or even to develop it. The 1992 Labour manifesto was clear:
We will not invest in new nuclear power stations, continue with those in the planning process or extend the lives of existing nuclear stations beyond their safe lifespan. Britain's dependence on nuclear power will therefore steadily diminish.
That, however, does not seem to stop Labour spokesmen. The right hon. Member for Copeland (Dr. Cunningham), the shadow spokesman on trade and industry—I notice that he is not here tonight—said on "North of Westminster" in mid-January:
I have always supported the civil nuclear industry … we mustn't let people, I mean the anti nuclear people of course, have one objective and that is to close down and wreck the nuclear industry",
despite the fact that that appears to be Labour's official policy.
The right hon. Member for Sedgefield (Mr. Blair) recently assured the environmentalists that Labour's green policy, "In Trust for Tomorrow", was still party policy, that he stood by it and that it formed the basis of the current Labour approach to the environment. It says:
Labour's energy research effort will be channelled away from the nuclear sector and into clean coal, (as well as renewables) … There remain serious environmental problems associated with nuclear power generation".
The document also refers to
not building any new nuclear power stations".
Yet the hon. Member for Clackmannan (Mr. O'Neill), the shadow energy spokesperson, said in an interview in British Nuclear Forum last autumn that the energy policy set out in "In Trust for Tomorrow"
isn't the last word as far as Labour's energy policy is concerned".
He followed that up on Radio 4 by saying that commissioning new nuclear power stations remained an option for any future Labour Government.
On 14 March 1995, on Second Reading of the Atomic Energy Authority Bill, Labour's science and technology spokesperson, the hon. Member for Kirkcaldy (Dr. Moonie), said in response to the question whether the new Labour party would build new nuclear power stations:
I do not know the answer."—[Official Report, 14 March 1995; Vol. 256, c. 715.]
That, at least, was more accurate than what most of the rest of the Labour party has been saying.

Mr. Martin O'Neill: I believe that the hon. Gentleman appreciates that there is richness in diversity. Would he say that there is a monolithic view among the Liberal Democrats? Will he tell us about the views of the hon. Member for Caithness and Sutherland (Mr. Maclennan), who normally attends all debates relating to nuclear matters? Has he been banned from the Chamber this evening?

Mr. Taylor: The Liberal Democrats' position is clear. I have put it on record, which is more than any Labour Member has been prepared to do tonight. If the hon.

Member for Clackmannan wishes to do so later, he can. My party wants to phase out nuclear power. We would continue research into it—we can see the need to do so—but we do not believe that the present nuclear generation capacity is necessary, and we will remove it. I do not think that we could be any clearer than that. I would welcome the hon. Gentleman clarifying Labour's position.
I have no dispute with Labour Back Benchers who have maintained a consistent and clear position and who have argued that they would like Labour policy to be different, but I do criticise Labour Front Benchers who will not say whether they would phase out the industry. They will not say whether they support the policy that they present to environmentalists, or the policy that they present to the British Nuclear Forum. They are saying different things to different people.

Mr. Ingrain: It may help the hon. Gentleman if I restate the position in relation to the debate that takes place in the Labour party. I was a delegate at the Labour party conference when "In Place of Trust" was passed. I was a delegate from the Transport and General Workers Union, which voted against that policy and will continue to argue against it. I do not speak for that union, which was not the only union to take that position. There is a clear movement towards change, which I expressed and which I hope will prevail. The hon. Member for Caithness and Sutherland (Mr. Maclennan) holds a similar view to me on the matter, and he may be able to convince the Liberal Democrats to take a more sensible approach.

Mr. Taylor: I make no criticism of the hon. Gentleman, who makes his position and that of the Labour party clear, but Labour Front Benchers are not prepared to do so. Labour looks in two different directions depending on which audience it is addressing, and it is time that it sorted that out.

Mr. Eggar: The hon. Gentleman has stated the Liberal Democrat party's position, and a document released today clearly says that it is in favour of phasing out nuclear power. When it says "phasing out" nuclear power, does it mean phasing out nuclear stations at the end of their natural lives—as approved by the nuclear inspectorate—or closing them before that?

Mr. Taylor: We have argued that nuclear power should be phased out by 2020. We accept that the industry could not be closed overnight, and it would be inappropriate to suggest that. We argue for a phasing out over that time.

Mr. Alan W. Williams: Will the hon. Gentleman give way?

Mr. Taylor: I must make progress, and the hon. Gentleman will agree that I have given way a number of times. I am conscious of the pressure of time.
The Labour party does not have a monopoly of confusion on the matter. The Government, while accepting that there is likely to be no new build, still argue the importance of nuclear power and say that taxpayers will benefit from the changes following privatisation. They also argue that the burdens of the nuclear industry will be lifted from the taxpayer and transferred to the private sector. That is comprehensively untrue, and they are not prepared to give figures either.
We are told that the liabilities will no longer fall on the taxpayer, but the full range of potential nuclear accident costs is enormous. For example, the accident at Chernobyl cost £200 billion for immediate damages alone, and funds still cannot be raised to tackle the long-term problems. Similar costs were incurred in the Three Mile island incident.
The overwhelming proportion of such liabilities, however, are not internalised in Britain, because Nuclear Electric need only have liability insurance up to a financial limit of £140 million per accident. The rest is covered by the taxpayer, with the costs of possible accidents falling on our children. If a company has only limited liability for its errors and something goes wrong, it is clear that its liabilities cannot be described as having been internalised.
Most crucially, the Government cannot explain the true profit and loss account facing the taxpayer. When I asked the Minister at the time of the statement what total costs will fall on the taxpayer in future, what the Government's best estimate of the costs associated with cleaning up Magnox are and what revenues are anticipated from privatisation, he was unable to respond. In other words, it is unclear whether this is a profitable exercise for the taxpayer.
The Government intend to end the nuclear levy two years early, reducing domestic electricity bills by 8 per cent. and providing a sweetener to gain public support for privatisation. The justification for the sweetener is that because of increased efficiency the decommissioning costs of Britain's ageing nuclear reactors are one third lower than when the levy was launched, yet the Government concede that they will still have to make up the difference of more than £2 billion, and possibly substantially more if the lower costs suggested are not gained.
In an attempt to allay concern that the taxpayer will have to pay again for decommissioning, Department of Trade and Industry officials said that a combination of cash sources and savings would be sufficient to meet the Magnox liabilities, and that £2.6 billion worth of privatisation proceeds will be used to meet the Magnox liabilities, yet from our knowledge of the costs of decommissioning we know that that cannot be true. We have some idea of the early costs of decommissioning the old Magnox reactors, but we do not have a long-term solution for the most highly radioactive materials. That is still being reviewed and researched.
We have no experience of decommissioning PWRs, and we have no realistic idea of how much it will cost. We do not know when that process will end, or how it will end. Moreover, unless a clear commitment is made to set up a proper segregated Magnox decommissioning fund, the potential cash source of privatisation proceeds may be used for other purposes, such as tax cuts at a general election.
Future taxpayers will be left to foot the huge bill for decommissioning and dealing with radioactive waste. That is effectively what will happen, and the idea that anything else will take place is sheer nonsense. The White Paper says that
there is no practical benefit from a segregated fund to meet nuclear liabilities".

The truth is that funds from privatisation will be treated as general Government revenue, and will be part of the Government's general accounts. The Government will therefore allow short-term tax cuts at the expense of long-term liabilities for our children.
Even the CBI cannot support that proposal. The Director General of the CBI said in The Guardian on 10 May:
We would urge the Government to put the money already raised into a special account to pay for decommissioning the older nuclear stations. As the levy was expected to continue to 1998, we would ask the Government to top up the fund by some of the sale proceeds.
Of course the Government cannot rely on the substantial amounts of money from the nuclear levy that has been paid because they have been invested not in decommissioning but in building Sizewell B. The taxpayer will thus be asked to pay twice, yet the benefits of any profit accruing to Sizewell B, once all its liabilities are removed, will accrue to the private sector.
The public have already paid for decommissioning Magnox through the fossil fuel levy on electricity bills, but £1.6 billion was diverted to Sizewell B. It is more than likely that the net income to the Government from this privatisation will be less than the sum invested in Sizewell B, let alone the other advanced gas-cooled reactors that the Government will sell off with it.
Privatisation leaves future generations of taxpayers to foot the bill for decommissioning Magnox stations; to take the risk that decommissioning the others will cost much more than anticipated; to take the risk of how to dispose of highly radioactive material in the future; and to take the risks if there are any accidents—and all to fund the Government's tax cuts now. That cannot be justified.
Future generations are being asked to take one further risk. For the most part, I do not argue that the private sector is necessarily less safe. Provided the highest autonomy is given to the nuclear inspectorate and others, I believe that every effort will continue to be made to keep nuclear power stations safe. The record of those in the industry is good, not just in this country but, in one respect, in others. After all, it was the people who ran Chernobyl who stayed there to stop a much more serious accident at the cost of their own lives.

Mr. Llew Smith: But those people died as a result.

Mr. Taylor: Absolutely. The courage that they showed is nevertheless an example to people.
I do not make personalised attacks on the approach that individuals take but I am concerned about the pressures that the Government are building into the privatisation process. The life of the Magnox stations has already been extended from 25 to 30 years; their average life expectancy is now estimated to be 37 years. In their White Paper, the Government encourage BNFL to
optimise the economic life of the stations.
The pressure is on further to extend the unsafe use of nuclear power stations. Despite the commitment that individual members of staff may have—at Chernobyl, people lost their lives as a result of that personal commitment to saving others—when such pressure is applied overall and the industry is structured in such a way that the Government seek to extend the life of nuclear stations and cut costs, risks are inevitably taken. By trying to get a return from Magnox stations well beyond their


design life and the safe limits of use, lives are put at risk. The very structure of the privatisation is, in the Minister's words, designed to "optimise" the economic lives of the stations and thus extend them beyond what is safe.
This is not a good privatisation. It is not a good deal for the taxpayer. It will cost the taxpayer and potentially put lives at risk. The Government should stop it now and I hope that they will listen to the strength of public opinion in opposition to it.

Mr. John Whittingdale: First, I congratulate the Government on their boldness and wisdom in deciding to privatise two nuclear generating companies. I was originally going to say "courage", but I do not wish to alarm my right hon. Friend the Minister too much.
I had feared that, after the setback which my right hon. Friend the President of the Board of Trade received over his proposal to privatise the Post Office, he might be reluctant to take the risk again. In many ways, the case for privatising nuclear generation is similar to that for privatising the Post Office. Like the Post Office, Nuclear Electric and Scottish Nuclear have dramatically improved their performance in recent years. They have also reached the point where the fetters of state ownership are proving a real constraint on the development of their business. 
It would no doubt have been possible to relax the controls to permit greater commercial freedom for the nuclear companies while keeping them in state ownership, but just as that is a second-best solution for the Post Office, it would have been an unsatisfactory solution for the nuclear generators and would still have left them unable to enjoy the full benefits of private sector ownership. The Government are therefore entirely right to opt for full privatisation and I hope that there may yet come a time when the Post Office, too, can enjoy the freedoms that that brings.

Mr. Llew Smith: If a privatised nuclear company decides to reprocess its spent nuclear fuel at THORP, might not the company, whose only reason for existence is to make money, be tempted to sell off plutonium to the highest bidder? Might not that nuclear sell-off lead to private proliferation? Could we learn something from the trial going on in Germany this week, involving plutonium being smuggled in from Russia purely for profit motives?

Mr. Whittingdale: I see no reason why that need be the case; it is an example of the kind of scaremongering that is bedevilling the debate. There are rigorous controls against such practice and I do not believe that they will be changed by the privatisation of the nuclear companies.
The privatisation of Nuclear Electric and Scottish Nuclear will be good for the companies; good for the electricity industry; good for electricity consumers and good for the United Kingdom. As a Member representing an English constituency, I should first like to pay tribute to Nuclear Electric on the remarkable turnaround that it has achieved in the past four years. There is no doubt that the company was not in a position to be privatised along with the rest of the industry in 1990. As has already been said, however, since that time output has increased by almost 45 per cent., productivity has doubled and the unit cost of nuclear-generated electricity is down by 40 per cent.
Nuclear Electric is a very different company from the one it was four years ago and there is no longer any doubt that it can be sold. The company has also made a strong case that it should be sold, because it needs full commercial freedom to compete effectively with other generators; to take advantage of the opportunities that exist and to invest for the future.

Mr. Merchant: Does my hon. Friend agree that Nuclear Electric has shown such a dramatic improvement in the past few years because it has been inspired by the possibility of becoming a private company and realises the benefits to it and the industry from doing so?

Mr. Whittingdale: My hon. Friend is absolutely right. The company has always made it clear that it believes that it will do better in the private sector and I have no doubt that it has aimed for that objective, with great success, in the past few years.
Privatisation will also be good for the entire electricity industry. Electricity privatisation has been an enormous success and the competition in generation that it has created has brought great benefits to consumers and the companies. The recent success of Nuclear Electric, however, has allowed it to increase its market share to the extent that there has been a creeping renationalisation of electricity supply. Nuclear Electric has already overtaken PowerGen in terms of market share and it may well have soon overtaken National Power if the latter's market share continued to fall. The result of that would have been that the largest electricity generator in the United Kingdom would once again have been publicly owned. That would have posed a real and growing threat to fair competition.
The Government's proposals will mean that the proportion of electricity generated by state-owned companies will now fall to just 8 per cent. and will decline further as the Magnox stations are phased out. The proposals will increase competition in the industry still further. In future there will be competition for the provision of base load supply as well. Both the privatised Nuclear Electric and the Magnox stations will supply the English and Welsh electricity base load and compete against each other.
I understand that some have argued that the amalgamation of Nuclear Electric and Scottish Nuclear will have the effect of reducing competition, but I do not believe that is significantly the case. The Scottish electricity market is largely distinct from the English and Welsh market and the transfer of power through the interconnector is not that great. The additional competition created by splitting the Magnox stations from the other nuclear plant will outweigh the marginal effect caused by the merger.
The increase in competition will also be good news for the electricity consumer. Just as increased competition in the gas industry—the Gas Bill successfully completed its passage through the House yesterday—will exert downward pressure on prices, the same will apply equally to electricity. A more immediate benefit, to which reference has already been made, will also be apparent. The early removal of the fossil fuel levy—itself a tribute to Nuclear Electric's success—will allow electricity prices to fall by a further 8 per cent. It is ironic that that will almost entirely negate the effect of VAT on electricity bills, which will now be substantially lower than they were before electricity privatisation.
The United Kingdom will benefit from privatisation as Nuclear Electric will be well placed to take advantage of the growing international market for the construction of nuclear generating plant. The British Nuclear Forum has estimated that market to be worth about £500 billion over the next 25 years.
As we know, more and more countries are turning to nuclear power, particularly on the Pacific rim. Nuclear Electric already has an extremely good record, and can point with pride at such achievements as the completion of Sizewell B, on time and below budget. With BNFL, it is rightly seen to be at the forefront of nuclear technology. If Nuclear Electric succeeds in its bid to build a similar power plant in Taiwan, in conjunction with Westinghouse, that alone will create 5,000 jobs for British firms.
Hon. Members have expressed fears that safety could be compromised in a privately owned nuclear company. I reject that argument. The British nuclear industry is one of the most tightly regulated in the world, and that will remain the case. When I get up each morning in my constituency and look out of my bedroom window, the dominant feature of the landscape that I see just three or four miles away is Bradwell nuclear power station: I am therefore extremely conscious of the importance of nuclear safety.
I have also had an opportunity to see at first hand the rigorous inspections and checks that took place at Bradwell before it was granted a 10-year extension of its operational life by the nuclear installations inspectorate. To achieve that, Nuclear Electric had to design and build new equipment such as the "snake", which allows remote ultrasonic inspection of the welds on the pressure vessel. I was pleased to be able to sponsor an exhibition in the Upper Waiting Hall quite recently, which enabled hon. Members to see something of the technology involved.
I understand and accept the reasons why Magnox stations such as Bradwell cannot be included in the privatisation. Inevitably, they are now reaching the end of their lives, and substantial costs will need to be met in their decommissioning. Bradwell is the oldest Nuclear Electric station that is now operational, having generated electricity since 1962. Those who work there know that it will have to close in due course—although I hope that it will be kept running for as long as that is safe and economically viable.
I am encouraged by the assurance that BNFL—which will in due course assume responsibility for the Magnox stations—has already given in that regard. I hope that the new position will allow the station a slightly longer life than it would have had if it had remained part of Nuclear Electric. Even when it does close, the decommissioning process itself will generate continuing employment at the station.
Let me end by repeating the concern that I raised last week with my right hon. Friend the President of the Board of Trade. Today, 397 people—many of whom are my constituents—work at Bradwell power station.

Dr. Michael Clark: Some are my constituents.

Mr. Whittingdale: I acknowledge that. Those people have never doubted that the station will close in the foreseeable future; however, they are highly skilled people, many of whom will wish to continue to work in

the nuclear industry. They represent a body of expertise that the country cannot afford to lose. Transfer to BNFL may open up new job opportunities, but they currently feel that they are being cut adrift from their parent company and that future employment opportunities—opportunities that they previously had—may be jeopardised.
It would clearly be impossible to guarantee those people jobs at BNFL, Nuclear Electric or any other company. I hope, however, that my right hon. Friend the Minister will consider ways of ensuring that they are not disadvantaged by the transfer. They should have the same opportunity to apply for other jobs within Nuclear Electric as they would have had if they had continued to be part of the company. I accept that the details will need to be worked out, but I ask my right hon. Friend to bear my points in mind in the coming months as he implements a policy that I strongly support.

Mr. Alan Simpson: I was amazed at the parallels drawn by the hon. Member for Colchester, South and Maldon (Mr. Whittingdale), who has just spoken. In his opening remarks he made connections between the proposals for privatisation of the Post Office and those relating to the nuclear industry. Although the hon. Gentleman may find it difficult to understand the difference, members of the public, however, have no difficulty in understanding the distinction between having a post office at the end of the street and having a nuclear power station there—or the relative desirability of having one rather than the other.
I welcome this debate in one important respect. I do so as an implacable opponent of the nuclear industry as a whole. The debate, however, allows us to explore the shabby and fraudulent financial basis on which the industry is constructed. The Government may be glibly off in pursuit of what they see as short-term pay-offs for the sale of the industry, but if we compare those with the long-term costs and consequences that the public will have to pay, we find that the pay-offs are dwarfed by the long-term costs.
I am grateful to the hon. Member for Truro (Mr. Taylor), who sought to provide some sort of profit and loss analysis of the transaction. For any sale in the world outside one would do exactly the same; taking stock of the money obtained in return for current capital assets and trying to cover the costs, at least, of the residual responsibilities that have to be borne.
We are told that the Government hope that privatisation will raise about £3 billion. It is against this figure that we must compare costs and losses. I am grateful to Scottish Nuclear for its clear calculations on the current construction costs of the nuclear power stations. It has said that the cost for Hunterston B would be £1 billion and Torness, £2.7 billion. I had to turn to the Government's figures for the current construction costs for Sizewell B, which amount to about £4 billion.
Beyond that, it has been difficult to gain any idea of the current construction costs for Nuclear Electric's advanced gas-cooled reactors from the figures in its annual accounts. If I am generous and assume that they would be only of the order of the lower costs of Scottish Nuclear's Hunterston B plant, we are still talking about a further £5 billion. That would require a break-even point on the


transaction of £12.7 billion. If we add into this account the residual clean-up costs that the Government will retain, in terms of the disposal and decommissioning of the Magnox reactors, we must add the Government figure of a further £9 billion.
If we consider the rudimentary exchange which one would expect to find in the marketplace, we realise that, in exchange for cash receipts today of £3 billion, the Government are prepared to write off £19 billion. That is simply the capital cost. If we then build in the continuing costs that will have to be met, the figure is even worse. On page 54 of the report that the Government issued in advance of their proposals they make it clear that the National Audit Office report on the costs of decommissioning nuclear facilities published in 1993 estimated that
the gross lifetime cost of discharging nuclear liabilities is well in excess of £40 billion.
In response, we are told by the Government that privatisation will reduce the costs of future liabilities. Reality suggests that those costs have always been hidden, will always be rising and will always be higher than we have ever been willing to acknowledge. Those costs will accumulate for the next 100 years at least. At this point I was reminded of the words of Mr. Micawber in "David Copperfield". He said:
Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
If Mr. Micawber was looking at these figures, however, he would be talking not about misery, but of madness. That is the scale of the costs that the public will have to face, not simply in my children's lifetime, but for generations to come.
The costs are bizarre and unacceptable, and to offset them the Government are offering the public a £20 sweetener. We should set that sweetener in context. The fossil fuel levy is being cancelled only 18 months before it was due to run out anyway. Let us examine the scale of the Government's generosity. The Library has provided me with figures about the amount of money that the levy has raised. It pointed out that in the years from 1990–91 to 1993–94, the levy raised £1.17 billion, £1.32 billion, £1.34 billion and £1.23 billion respectively.
In that period, in excess of £5 billion has been paid to Nuclear Electric for decommissioning. It is interesting that those levy payments appear in the accounts of Nuclear Electric not in the form of a fund to deal with decommissioning, but as part of its current profit and loss statements. The money has not been set aside for decommissioning purposes. Anyone who has any doubts about that should read the answer that the Minister gave during the debate on 2 March this year when he explained clearly that Nuclear Electric's income from the fossil fuel levy was not hypothecated to any particular activities. That means that the money has not been put aside to cover decommissioning; it has been used to meet current costs.
We have also been told that the nuclear industry is extremely profitable, with a turnover of more than £1 billion per year. At this point, I draw the attention of the House to an analysis provided by Greenpeace. It states:
Nuclear Electric alone has liabilities of over £27 billion for its nuclear waste and decommissioning … Every penny that the industry would ever earn is already spoken for to deal with the radioactive mess".

That means that, if the proceeds of privatisation are spent on tax cuts, the taxpayer will have to find the money again. In fact, I suspect that the taxpayer will pay for it again and again and again, because the money has not been put aside for decommissioning.
We are also told that we may be able to defer the decommissioning issue; that it is a 100-year issue. The sad truth is that it may not be. Less than a month ago, on 26 April, we remembered the ninth anniversary of the Chernobyl disaster. I wish to put on record the cost of that disaster in cash and human terms. Some 8,000 people in the Kiev area have died as a result of the Chernobyl explosion. Some 250,000 people are disabled or seriously ill. Thyroid cancers have risen 800-fold and one in four children born since Chernobyl has birth defects. Orphanages in the country are full of children whose parents could not cope or who simply died. More than 2,000 towns and villages in Belarus have had to be evacuated and 84,000 people from the region still await resettlement. A further 16,000—the lucky ones—have been squeezed into high-rise apartments in Minsk. That is the human cost of the disaster.
In addition to that, the Government of the Ukraine are having real difficulties meeting the commitments that they made to close down the entire Chernobyl plant by 2000 because they cannot afford to meet the cost. They face that cost today. Would the City bear such a cost in the Government's proposed privatisation? I remind the House that on 7 March this year when the electricity regulator, Stephen Littlechild, referred to a proposal to review electricity prices there was an immediate 17 per cent. fall in the share prices of the electricity utilities. Capital does a runner when anything threatens the profits; when anyone mentions increased responsibilities, the profiteers do a bunk. That is what would happen in a privatised nuclear industry.

Mr. Llew Smith: On the question of profits, does my hon. Friend agree with the hon. Member for Colchester, South and Maldon (Mr. Whittingdale), who said that the safeguards were strong enough to prevent the sale of plutonium to the highest bidder? Does my hon. Friend think that we have something to learn from the alleged smuggling of plutonium into Germany?

Mr. Simpson: The experience of what happened in Germany and the trial that is taking place of those who attempted to smuggle enriched uranium and plutonium out of the Soviet Union is an object lesson to us all and we should be terrified. I feel no safer because of those security guarantees.
There will be no guarantees, however, that the City will meet the costs of the long-term obligations for decommissioning that are inevitably and inextricably linked with the industry. The threatened privatisation of the nuclear industry is an act of irresponsibility verging on lunacy, and for that reason the proposals must be opposed in the House and stopped in the country.
I am absolutely clear that outside this Chamber the public reaction will call a halt to the madness of privatising the nuclear industry, and the notion that we can discharge the nation's long-term responsibilities and sacrifice them on the altar of the short-term profitability that the Government are seeking.
It may be the lifeline that the Government need to survive, but the public have already drawn a line against this. They would not continue to pretend that the nuclear industry would ever be viable if it were separated from the


nuclear weapons industry and linked instead to the long-term environmental costs that it has to bear. The public would say, as we do, that the proposed privatisation is no more than an attempt to sell a nuclear pig in an everlasting environmental poke. Such folly is not acceptable in the House or in the country.

Mr. Douglas French: At the centre of the privatisation, if I am allowed to view it from England rather than Scotland, is Nuclear Electric, and at the centre of Nuclear Electric are my 900 constituents working at the headquarters in Barnwood in Gloucester.
My right hon. Friends the President of the Board of Trade and the Minister of State will know from my discussions with them in the past week how dismayed I have been at the lack of reliable and unambiguous information about the future of the work force at Barnwood. My views reflect the anxieties of my constituents and it is not surprising that they feel anxious.
My constituents waited a long time for the nuclear review, but when it arrived, nowhere in its 93 pages did Barnwood get a mention. My right hon. Friend the President of the Board of Trade made a statement in the House on 9 May. Nowhere in that statement was any mention made of Barnwood.
The statement was strong on the commercial case for privatisation, which I accept is persuasive, but the business consists also of people—skilful, loyal, hardworking and dedicated people who should not be taken for granted. Without their past efforts, the business would not be where it is. Without their future efforts and skills, privatisation will not succeed.
Hon. Members have referred to the success story of Nuclear Electric in the past five or six years. It is worth reflecting that in 1989 the performance of AGRs was very poor; now it is the best in the world. In 1989, the company faced the considerable hurdle of constructing and operating Sizewell B—it was a step into the unknown. Six years later, Sizewell B has been built to time at the cost anticipated and successfully commissioned.
In those six years, the unit costs for electricity, which were 5.2p per kWh, have been reduced to 2.7p per kWh. Output per man at Nuclear Electric has virtually doubled and the operating loss, which was about £1.1 billion six years ago, is now down to £35 million and destined to go into surplus.
The business has certainly achieved considerable success.

Mr. Clapham: Does the hon. Gentleman agree that the facts he has just advanced support the argument that the social purposes cannot be advanced by introducing a profit incentive in the industry?

Mr. French: No, I do not accept that argument at all and I shall explain why in a moment.
I was pointing out the considerable success that the business has achieved as a result of the substantial efforts of the people who work for it. I was pleased that that was acknowledged in broader terms at paragraph 9.14 of the review. But the success has not happened by accident. It has happened because of the considerable efforts of the employees at Barnwood.
For many of those employees, that success has been achieved against a background of great uncertainty and dislocation. Many of them had an unsettling time when the changeover took place from the Central Electricity Generating Board. Some had a spell at National Power. Some have moved several times within Nuclear Electric, especially from Knutsford. They have seen the number of jobs steadily shrinking while waiting for the review. They had a legitimate expectation that the review would map out a clear future. Arguably, it does commercially, but for the people who have been dogged by uncertainty up to now, it marks the beginning of a further period of uncertainty and they are entitled to know where they stand.

Mr. Dalyell: Will the hon. Gentleman give way?

Mr. French: If the hon. Gentleman will forgive me, I will not because I have to conclude by a particular time.
We have been told that 100 jobs will be created in Scotland to cover the financial and legal functions of head office. I seek from my right hon. Friend the Minister tonight an assurance that a significant proportion of that 100 will be additional local Scottish recruitment and that 100 new jobs in Scotland does not automatically mean 100 lost jobs at Barnwood.
I seek an assurance also that there is no validity in the claim that 300 people are about to lose their jobs in Barnwood. I know of no basis in fact to substantiate that claim, but it has gained currency. I should like an assurance that there is no basis in fact.
I also need an assurance from my right hon. Friend that deep and careful thought will be given to the future of Magnox and those who work on it. I realise that it is difficult to privatise Magnox stations because they will not generate enough cash during their remaining lifetime to meet accrued liabilities. I see risks in Magnox being a stand-alone company because, once the AGRs and the PWRs are split off, the income stream will be insufficient to meet liability. It would have been preferable for Nuclear Electric to contract to run the publicly owned Magnox stations on behalf of the Government. I share the disappointment of the chairman, John Collier, that that formula was not adopted.
I do know, however, that decommissioning Magnox requires expertise that is available only at Barnwood. Therefore, I ask my right hon. Friend for an assurance that every possible effort will be made to keep that expertise at Barnwood. Whether Magnox is a stand-alone public company or in time comes to be linked to British Nuclear Fuels Ltd., there is nothing to stop it being located in Gloucester and every reason why it should be located there.
All privatised companies have spread their wings in overseas markets. There is a growing international market for nuclear power, as my hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) spelt out so clearly. There are bids to build a nuclear power station in Taiwan, and that is only the beginning of the possible export opportunities. South Korea, China, the Pacific rim, as my hon. Friend pointed out, are all exciting opportunities.

Mr. Merchant: Latin America, too.

Mr. French: Latin America, as well.
If those opportunities are seized, the business overall will be immensely strengthened and jobs made much more secure. But an essential prerequisite for getting the business will be technical expertise. I therefore seek an assurance from my right hon. Friend the Minister that a battle will be fought to win export business because that is the way to strengthen job opportunities for those who have technical expertise, and technical expertise is essential if export business is to be won.
I believe that Nuclear Electric's business is likely to be more successful in the private sector than in the public sector. I certainly do not support the Opposition's disgraceful motion, which strikes me as a blindly political diatribe in clause IV mode, and which does not begin to map out a future for Nuclear Electric but seeks only to cling to the past.
I know that my right hon. Friend the Minister will appreciate that I need some reliable assurances on the issues that I have drawn to the House's attention before I can support him in the Lobby tonight.

Mr. Martin O'Neill: The short debate has enabled several hon. Members to express legitimate constituency worries. Indeed, the hon. Member for Gloucester (Mr. French) has just expressed anxieties about certain aspects of the merger from a different angle from that which Opposition Members would choose—but legitimate none the less.
What was interesting in the debate was the absence of any of the usual arguments in favour of privatisation. No Minister or Conservative Member has argued that the work force should be cut because the nuclear power industry is a bloated, overstaffed nationalised industry. We know that, since it was split off from the Central Electricity Generating Board, the work force has been cut by about 50 per cent. for the English stations and 25 per cent. for Scottish Nuclear. Indeed, there have been about 8,000 voluntary redundancies, so the labour force issue does not arise.
The issue of inefficiency in the public sector does not arise. The most up-to-date figures, published by Scottish Nuclear a few days ago, show that unit generating costs have decreased to 2.2p per kWh from 2.9p per kWh in 1993–94. Power output has increased to an all-time record of 16.9 TWh and output per employee has increased by about 32 per cent. in that time.
In some respects that is because, for the first time, the nuclear industry has been free of the shackles of the CEGB and has been able to concentrate on its own affairs and to tackle the genuine problems of the advanced gas-cooled reactor and to make it an efficient and safe form of generating nuclear power.
The Government repeatedly trot out arguments in favour of privatisation to the effect that the companies will cease to be a burden on the taxpayer. The short-sightedness of the Government is revealed by the fact that those companies contribute about £100 million per annum to the taxpayer.
We are told on occasions that we need privatisation to introduce good, commercial management, yet the figures that I have quoted would not exist, were it not for the quality of the management and the way in which they have been able to work with the labour force to produce the achievements that I described.
The hon. Member for Gloucester mentioned the freedom to seek business abroad, yet Nuclear Electric has been working with American consortiums to secure a Taiwanese contract. They were "down to the wire", as the saying goes, and they have now been told that they must rebid, but it was obvious that Nuclear Electric in the public sector was perfectly capable of associating with private companies abroad and of making a great success of one of the most highly competitive contract processes that has ever occurred in the energy business.
We hope that, regardless of who owns Nuclear Electric, that work will come to Britain, because it is vital not only for people who work in the power stations but for those who work in the electricity supply and equipment supply industries, in which there are so many manufacturing jobs throughout the country.
Should there be freedom to seek investment in the market? Paragraph 4.41 of the White Paper refers to the fact that, with borrowing in the public sector at 8 per cent., if a new power station were built, the price of its electricity would be 2.9p per kWh. However, we know that that money will not be forthcoming from the Government. If the industry goes to the market, it will have to borrow at an interest rate of at least 11 per cent., which would put the price of a unit of electricity in a new power station at about 3.7p per kWh. No one has suggested tonight that anyone will invest in new nuclear power stations if the price of electricity is that envisaged in those figures. The Government have said:
Private finance for a new nuclear station is unlikely to be forthcoming without a transfer of nuclear specific risks away from private investors to another party in the project.
The other party in the project would have to be the taxpayer, and it would have to be at substantial subsidy. No one is prepared to advocate that case.
Faced with such quantifiable problems, the Government have decided to keep the ageing Magnox stations in the public sector, with us, the taxpayers, picking up the bill for decommissioning and waste management. Let us face it—that will be no paltry sum. The Engineers and Managers Association, the trade union of the power station bosses, has noted that the nuclear liabilities of the two companies amount to about £10 billion. That discounted figure was largely accounted for by Magnox decommissioning.
The money that electricity consumers paid to fund the work has been swallowed up, either by Sizewell B or by work on the advanced gas-cooled reactors, to which I referred earlier. Some of it may have been paid to the national loans fund and found its way into the financing of tax cuts.
The likely sum to be raised from privatisation is about £2 billion to £3 billion. That would probably afford a 1.5p cut in the tax rate. Taxpayers will be left to fund some £10 billion in decommissioning liabilities. That will work out at a cost of about £700 for every household in the land. We will be left with a holding company, supposedly based in Scotland, and perhaps in Edinburgh, although my hon. Friend the Member for Linlithgow (Mr. Dalyell) understandably argued that it should be based at Peel park, and there seems to be some logic to that.
Consideration must be given to the fact that, apparently, there will be premises in Gloucester and in London. If there were a split in the management structure, it would be attractive for the new management team to base itself ultimately in London, although the new chairman, Mr. John Robb, whose appointment was announced this


evening, comes from Edinburgh. He seems to be eminently qualified to operate the nuclear industry's accounting system, in so far as he is chairman of Horserace Betting Levy Board. I do not know what other qualities he brings to these matters. We shall have to wait to see how long he is in post, because the holding companies have a somewhat chequered history.
If the stations are to achieve any further reductions in operations, and if the new chairman is to be able to deliver the goods, I suspect that the first casualties of the new order will be the same casualties that have emerged in the other energy privatisations—the research and development functions. They are important in that, in the nuclear industry, they have been closely linked to safety arrangements.
In Britain, the research that has been undertaken and the safety culture that has been a feature of the industry have been the real successes of the nuclear industry. Some speeches tonight, especially that of the hon. Member for Truro (Mr. Taylor), were scaremongering and alarmist about the nature of the nuclear industry. Flippant comparisons have been made between the nuclear industry in Britain and that in the former Soviet Union. It is like comparing a Jaguar car at its best with an inefficient, clapped-out old Lada, with exactly the same care and attention given to the safety and maintenance of Ladas as are showered on cars such as Jaguars.
In part, the safety culture will remain—we do not deny that, but we doubt whether the research and development emphasis will be what it was in the past. If that culture and the mass of big science abilities are not kept together, the nuclear installations inspectorate will encounter difficulties in trying to maintain high safety levels, which will be expensive and dangerous to secure. In the United States, the industry operates in a different way. Its safety regulatory body is now a massive bureaucracy.
We need assurances from the Government that they will insist that the science and research elements which are critical to the industry will remain. The Government have used a great deal of ingenuity and have given a great deal of attention to triple-locking arrangements for the location of an office. Many of us are anxious that they should give as much attention to the location of the laboratories and the safety centres which are such an integral part of our industry.

Mr. Miller: I am sure that my hon. Friend will acknowledge the point made by the hon. Member for Gloucester (Mr. French) about the skills of the Magnox staff at Barnwood. Does my hon. Friend share my concern at the fact that we have heard very little from the Government about their intentions for the science base at Berkeley technology centre?

Mr. O'Neill: I understand my hon. Friend's concern because that is an important employer in the north-west and it is—

Mr. Miller: It is in the south-east.

Mr. O'Neill: I apologise. I am so accustomed to my hon. Friend defending the rights of his constituents that I assumed that that part of the nuclear industry was located in his constituency.
My point remains; we are talking about big science and important research projects. We are talking about spin-offs which relate directly to nuclear safety—an area in which Britain can claim some credit for having a good record and not being complacent.
We want to know whether those things will be sustained and whether other problems will be dealt with. Will the competition issue be dealt with? I do not look to the Minister for much consolation there, but I look to the Director General of Electricity Supply. He ducked out the last time when the second tranche of PowerGen and National Power was being floated. He should have made a reference to the Monopolies and Mergers Commission, but he did not. He is now trying to make the best of a bad job by persuading them to divest themselves of some power stations to try to create more competition. If he wants competition, he should ensure that the privatisation scheme is subject to a view from the Monopolies and Mergers Commission.
We must take account of the arrangements that exist in Scotland where the must-take arrangement will be transferred from a public sector company to a private sector company. It will be interesting to see whether the North of Scotland Hydro-Electric Board and Scottish Power will be as keen to operate under the must-take arrangements regardless of price and whether they will seek a judicial review. It is reasonable to assume that there will be a number of legal or quasi-judicial obstacles in the way of this privatisation if the interests of the taxpayer and electricity consumers are to be properly protected.
We do not believe that the privatisation of the industry will make no difference. We believe that it is essential that the industry remains in the public sector. We know that the public have deep-seated, if not always correct, views on the issue of nuclear safety. What is more, we want to be certain that this debate will not be the last opportunity that the House has to debate the privatisation of the nuclear industry.
We recognise that this is the last gasp attempt of the Government to rustle up a few bob in the short term to provide money for bribes before an election. I do not think that the public will be taken in by that. As hon. Members go about the country and hear what their constituents feel about this privatisation, they will be clamouring for another vote. Before the Minister sits down, we want him to tell us that there will be other votes on this issue and that there will be the broadest possible consultation, such as that to which the Prime Minister referred when he came to Scotland last week. Before any subsequent votes, we want to see that there is still an opportunity for us to finish this debate and to finish privatisation. We will do that by going through the Lobby this evening to ensure that we get the vote that we want and end any threat of privatisation to an industry that is currently serving the country very well.

The Minister for Industry and Energy (Mr. Tim Eggar): The remarkable thing about the speech of the hon. Member for Clackmannan (Mr. O'Neill), like that of his hon. Friend the Member for Hamilton (Mr. Robertson), was that he said not a word about the Labour party's policy on nuclear power. Indeed, he was about as forthcoming and knowledgeable on Labour party policy


on nuclear power as he was about the geography of the United Kingdom when he seemed to think that Berkeley was in the north-west.
My hon. Friend the Member for Gloucester (Mr. French) is understandably concerned about the interests of his constituents at Barnwood. He also rightly—and almost alone among hon. Members—paid tribute to the work done by the management and staff of Nuclear Electric. He asked me for certain assurances about the staff at Barnwood. First, I can tell him quite categorically that the transfer of work from England to Scotland with regard to Barnwood certainly represents fewer than 50 jobs which might go to Scotland. Secondly, he was concerned about the rumours which had apparently got round at Barnwood about some 300 job losses. I can tell him that those rumours are completely unfounded.
My hon. Friend also raised the issue of the location of the headquarters of the new Magnox company and the employees who would support it. I have taken very careful note of what my hon. Friend said tonight and what he has said to me and my right hon. Friend the President of the Board of Trade during the past few days. I have raised this matter with Nuclear Electric, which has assured me that it will pay the greatest attention to the welfare and convenience of staff in taking decisions about locations.
I also assure my hon. Friend that he and his constituents will get an opportunity to argue their case as part of Nuclear Electric's normal consultative processes. I will also draw his concern to the attention of the chairmen of the holding company and of the new company, when it is established, which will deal with the Magnox stations.
My hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) also raised concerns of behalf of his constituents. I assure him that I have taken careful note of them and will reflect them in my discussions with management.
My hon. Friend the Member for Gloucester asked about the future of the export business. I attach tremendous importance to export opportunities, both for Nuclear Electric and for BNFL and I regard that as a major opportunity for the UK.
My hon. Friend the Member for Colchester, South and Maldon and, in particular, my hon. Friend the Member for Rochford (Dr. Clark), raised issues and expressed concern about competition. The Scottish electricity market, in effect, operates separately from the electricity market in England and Wales. The nuclear generators operate in the base load element of that market, and in practice base load competition in England and Wales will be increased as a result of the spinning out of the new Magnox company. Far from competition being reduced, it is my very strong belief that these proposals will enhance it.
The hon. Member for Cunninghame, North (Mr. Wilson) also raised that issue. He, of course, did not say that he had received a letter from Professor Littlechild on the subject when he indicated, broadly speaking—and I stress broadly—that he accepted the argument about increased base load competition in England and Wales. Getting more competition in generation, especially in marginal plants, and setting the pool price remains an important objective. The undertakings that the director general negotiated last year with National Power and PowerGen about the disposal of plant are an important

part of that process. I support the initiatives that the director general took then and look forward to a successful outcome.
Much has been said about safety in this debate. Some Opposition Members have attempted to raise what I can only call safety scares. That is despite the fact that the Government have said clearly, and my right hon. Friend the Secretary of State has said specifically, that safety will be paramount and despite the fact that the nuclear installations inspectorate serves under the tripartite Health and Safety Commission on which, of course, the unions are represented.
The HSC's evidence to the nuclear review made it clear that the safety regime could cope with any restructuring of the industry. Indeed, the nuclear installations inspectorate has made it clear that the safety regime already operates at private sector nuclear sites. Such sites have been operating under the present regime for a number of years, including the period when the right hon. Member for Chesterfield (Mr. Benn) was Secretary of State for Energy.
Much has been said about the alleged threat to Scotland and to Scottish Nuclear from our proposals. Where is that threat? The creation of 100 high-quality jobs in Scotland is certainly no threat. A new world-class company is to be headquartered in Scotland and there will be an effective triple guarantee that the company will stay in Scotland. A Scottish chairman has also been appointed to the holding company. That is no threat to Scotland. There is a reduction in electricity prices for domestic consumers in Scotland—where is the threat in that? My right hon. Friend's announcement is good news for Scotland.
The Labour party has consistently opposed privatisation and the benefits which have flowed to the consumers from it. I will spell out to Opposition Members what those benefits are. First, they will benefit from the lifting of the nuclear levy. In England and Wales, domestic electricity consumers will save on average more than £20 as a result of the announcement. Consumers are already paying £13 less in real terms than they were before privatisation. Another £11 reduction in their bills is in the pipeline, and that is before any further tightening of price controls. The newspapers also tell us that the flotation of the National Grid could bring a one-off bonus of around £30 to consumers.
To sum up, therefore, our privatisation policy for the nuclear industry and for the traditional non-fossil fuel generating industry could eventually produce a saving of no less than £75 for the average electricity consumer in England and Wales in this year alone. Put into perspective, that amounts to 25 per cent. of the average electricity bill in England and Wales saved in one year. That saving would not have been made but for the Government's commitment to the privatisation of the electricity industry and the additional privatisation of nuclear electricity.
We know that the Labour party opposes privatisation for the sake of old socialist dogma, but we do not know what the Labour party's policy is on nuclear power. Its manifesto states:
We will not invest in new nuclear power stations".
To be fair to the hon. Member for East Kilbride (Mr. Ingram), he made it clear that he stood as a Labour party candidate at the last election while not believing a word of his own party's manifesto with regard to nuclear power.


He said that he would fight and fight again to change Labour party policy. The hon. Member for Hamilton refused to say what Labour party policy was, as did the hon. Member for Clackmannan. The only honest man on the Opposition Benches seems to be the hon. Member for Kirkcaldy (Dr. Moonie): when I pressed him on Labour party nuclear policy in a previous debate, he said that he did not know the answer.
Privatisation is good for the consumer, good for the nuclear industry and it should be approved by this House.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 252, Noes 284.

Division No. 151]
[10.00 pm


AYES


Abbott, Ms Diane
Cummings, John


Allen, Graham
Cunliffe, Lawrence


Anderson, Donald (Swansea E)
Cunningham, Jim (Covy SE)


Anderson, Ms Janet (Ros'dale)
Cunningham, Rt Hon Dr John


Armstrong, Hilary
Dalyell, Tam


Ashdown, Rt Hon Paddy
Davidson, Ian


Ashton, Joe
Davies, Bryan (Oldham C'tral)


Austin-Walker, John
Davies, Rt Hon Denzil (Llanelli)


Banks, Tony (Newham NW)
Davies, Ron (Caerphilly)


Barnes, Harry
Denham, John


Barren, Kevin
Dewar, Donald


Battle, John
Dixon, Don


Bayley, Hugh
Donohoe, Brian H


Beckett, Rt Hon Margaret
Dowd, Jim


Beggs, Roy
Dunnachie, Jimmy


Beith, Rt Hon A J
Dunwoody, Mrs Gwyneth


Bell, Stuart
Eastham, Ken


Benn, Rt Hon Tony
Enright, Derek


Bennett, Andrew F
Etherington, Bill


Bermingham, Gerald
Evans, John (St Helens N)


Berry, Roger
Ewing, Mrs Margaret


Betts, Clive
Fatchett, Derek


Boateng, Paul
Faulds, Andrew


Bradley, Keith
Field, Frank (Birkenhead)


Bray, Dr Jeremy
Flynn, Paul


Brown, Gordon (Dunfermline E)
Foster, Rt Hon Derek


Brown, N (N'c'tle upon Tyne E)
Foster, Don (Bath)


Bruce, Malcolm (Gordon)
Foulkes, George


Burden, Richard
Fraser, John


Byers, Stephen
Fyfe, Maria


Caborn, Richard
Galbraith, Sam


Callaghan, Jim
Galloway, George


Campbell, Mrs Anne (C'bridge)
Gapes, Mike


Campbell, Menzies (Fife NE)
Garrett, John


Canavan, Dennis
Gerrard, Neil


Chidgey, David
Gilbert, Rt Hon Dr John


Chisholm, Malcolm
Godman, Dr Norman A


Church, Judith
Godsiff, Roger


Clapham, Michael
Golding, Mrs Llin


Clark, Dr David (South Shields)
Gordon, Mildred


Clarke, Eric (Midlothian)
Graham, Thomas


Clarke, Tom (Monklands W)
Grant, Bernie (Tottenham)


Clelland, David
Griffiths, Nigel (Edinburgh S)


Clwyd, Mrs Ann
Griffiths, Win (Bridgend)


Coffey, Ann
Grocott, Bruce


Cohen, Harry
Hain, Peter


Connarty, Michael
Hall, Mike


Cook, Frank (Stockton N)
Hardy, Peter


Cook, Robin (Livingston)
Harvey, Nick


Corbett, Robin
Hattersley, Rt Hon Roy


Corbyn, Jeremy
Henderson, Doug


Cousins, Jim
Heppell, John


Cox, Tom
Hill, Keith (Streatham)





Hinchliffe, David
O'Brien, William (Normanton)


Hodge, Margaret
O'Hara, Edward


Hoey, Kate
Olner, Bill


Hogg, Norman (Cumbernauld)
O'Neill, Martin


Home Robertson, John
Orme, Rt Hon Stanley


Hood, Jimmy
Parry, Robert


Hoon, Geoffrey
Pearson, Ian


Howarth, George (Knowsley North)
Pike, Peter L


Howells, Dr. Kim (Pontypridd)
Pope, Greg


Hoyle, Doug
Powell, Ray (Ogmore)


Hughes, Kevin (Doncaster N)
Prentice, Bridget (Lew'm E)


Hughes, Robert (Aberdeen N)
Prentice, Gordon (Pendle)


Hughes, Roy (Newport E)
Prescott, Rt Hon John


Hughes, Simon (Southwark)
Primarolo, Dawn


Hutton, John
Quin, Ms Joyce


Illsley, Eric
Randall, Stuart


Ingram, Adam
Raynsford, Nick


Jackson, Glenda (H'stead)
Reid, Dr John


Jackson, Helen (Shef'ld, H)
Rendel, David


Jamieson, David
Robertson, George (Hamilton)


Janner, Greville
Robinson, Geoffrey (Co'try NW)


Jones, Barry (Alyn and D'side)
Roche, Mrs Barbara


Jones, Jon Owen (Cardiff C)
Rogers, Allan


Jones, Lynne (B'ham S O)
Rooker, Jeff


Jones, Martyn (Clwyd, SW)
Rooney, Terry


Jowell, Tessa
Ross, Ernie (Dundee W)


Kaufman, Rt Hon Gerald
Rowlands, Ted


Keen, Alan
Salmond, Alex


Kennedy, Charles (Ross,C&S)
Sedgemore, Brian


Kennedy, Jane (Lpool Brdgn)
Sheerman, Barry


Khabra, Piara S
Sheldon, Rt Hon Robert


Kilfoyle, Peter
Shore, Rt Hon Peter


Kirkwood, Archy
Short, Clare


Lestor, Joan (Eccles)
Simpson, Alan


Lewis, Terry
Skinner, Dennis


Litherland, Robert
Smith, Andrew (Oxford E)


Livingstone, Ken
Smith, Chris (Isl'ton S & F'sbury)


Lloyd, Tony (Stretford)
Smith, Llew (Blaenau Gwent)


Loyden, Eddie
Smyth, The Reverend Martin


McAllion, John
Soley, Clive


McAvoy, Thomas
Spearing, Nigel


McCartney, Ian
Spellar, John


McCrea, The Reverend William
Squire, Rachel (Dunfermline W)


Macdonald, Calum
Steinberg, Gerry


McFall, John
Stevenson, George


McKelvey, William
Stott, Roger


Mackinlay, Andrew
Strang, Dr. Gavin


McLeish, Henry
Sutcliffe, Gerry


Maclennan, Robert
Taylor, Mrs Ann (Dewsbury)


McMaster, Gordon
Taylor, Matthew (Truro)


McNamara, Kevin
Thompson, Jack (Wansbeck)


MacShane, Denis
Timms, Stephen


McWilliam, John
Touhig, Don


Madden, Max
Tyler, Paul


Mahon, Alice
Vaz, Keith


Mandelson, Peter
Walker, Rt Hon Sir Harold


Marek, Dr John
Wallace, James


Martin, Michael J (Springburn)
Walley, Joan


Martlew, Eric
Wareing, Robert N


Meacher, Michael
Watson, Mike


Michael, Alun
Wicks, Malcolm


Michie, Bill (Sheffield Heeley)
Wigley, Dafydd


Michie, Mrs Ray (Argyll & Bute)
Williams, Rt Hon Alan (Sw'n W)


Milburn, Alan
Williams, Alan W (Carmarthen)


Miller, Andrew
Wilson, Brian


Morgan, Rhodri
Winnick, David


Morley, Elliot
Wise, Audrey


Morris, Rt Hon Alfred (Wy'nshawe)
Worthington, Tony


Morris, Estelle (B'ham Yardley)
Wray, Jimmy


Morris, Rt Hon John (Aberavon)
Wright, Dr Tony


Mowlam, Marjorie
Young, David (Bolton SE)


Mudie, George



Mullin, Chris
Tellers for the Ayes:


Murphy, Paul
Mr. Joe Benton and


Oakes, Rt Hon Gordon
Mr. Robert Ainsworth.






NOES


Ainsworth, Peter (East Surrey)
Eggar, Rt Hon Tim


Aitken, Rt Hon Jonathan
Elletson, Harold


Alison, Rt Hon Michael (Selby)
Emery, Rt Hon Sir Peter


Allason, Rupert (Torbay)
Evans, David (Welwyn Hatfield)


Amess, David
Evans, Jonathan (Brecon)


Arbuthnot, James
Evans, Nigel (Ribble Valley)


Arnold, Jacques (Gravesham)
Evans, Roger (Monmouth)


Arnold, Sir Thomas (Hazel Grv)
Evennett, David


Ashby, David
Faber, David


Atkins, Robert
Fabricant, Michael


Atkinson, David (Bour'mouth E)
Fenner, Dame Peggy


Atkinson, Peter (Hexham)
Field, Barry (Isle of Wight)


Baker, Rt Hon Kenneth (Mole V)
Fishburn, Dudley


Baker, Nicholas (North Dorset)
Forman, Nigel


Baldry, Tony
Forth, Eric


Banks, Matthew (Southport)
Fox, Dr Liam (Woodspring)


Bates, Michael
Fox, Sir Marcus (Shipley)


Batiste, Spencer
Freeman, Rt Hon Roger


Bellingham, Henry
French, Douglas


Bendall, Vivian
Gale, Roger


Beresford, Sir Paul
Gallie, Phil


Biffen, Rt Hon John
Gardiner, Sir George


Booth, Hartley
Garel-Jones, Rt Hon Tristan


Boswell, Tim
Garnier, Edward


Bottomley, Peter (Eltham)
Gill, Christopher


Bottomley, Rt Hon Virginia
Gillan, Cheryl


Bowden, Sir Andrew
Goodlad, Rt Hon Alastair


Bowis, John
Goodson-Wickes, Dr Charles


Boyson, Rt Hon Sir Rhodes
Gorman, Mrs Teresa


Brandreth, Gyles
Gorst, Sir John


Brazier, Julian
Grant, Sir A(SW Cambs)


Bright, Sir Graham
Greenway, Harry (Ealing N)


Brooke, Rt Hon Peter
Griffiths, Peter (Portsmouth, N)


Brown, M (Brigg & Cl'thorpes)
Grylls, Sir Michael


Browning, Mrs Angela
Gummer, Rt Hon John Selwyn


Bruce, Ian (Dorset)
Hague, William


Budgen, Nicholas
Hamilton, Rt Hon Sir Archibald


Burns, Simon
Hamilton, Neil (Tatton)


Burt, Alistair
Hampson, Dr Keith


Butcher, John
Hanley, Rt Hon Jeremy


Butler, Peter
Hannam, Sir John


Butterfill, John
Hargreaves, Andrew


Carlisle, John (Luton North)
Harris, David


Carlisle, Sir Kenneth (Lincoln)
Haselhurst, Alan


Carrington, Matthew
Hawkins, Nick


Carttiss, Michael
Hayes, Jerry


Cash, William
Heald, Oliver


Channon, Rt Hon Paul
Heath, Rt Hon Sir Edward


Clappison, James
Heathcoat-Amory, David


Clark, Dr Michael (Rochford)
Hendry, Charles


Clifton-Brown, Geoffrey
Hicks, Robert


Coe, Sebastian
Higgins, Rt Hon Sir Terence


Colvin, Michael
Hill, James (Southampton Test)


Congdon, David
Hogg, Rt Hon Douglas (G'tham)


Conway, Derek
Horam, John


Cope, Rt Hon Sir John
Hordern, Rt Hon Sir Peter


Cormack, Sir Patrick
Howard, Rt Hon Michael


Couchman, James
Howarth, Alan (Strat'rd-on-A)


Cran, James
Howell, Rt Hon David (G'dford)


Currie, Mrs Edwina (S D'by'ire)
Howell, Sir Ralph (N Norfolk)


Curry, David (Skipton & Ripon)
Hughes, Robert G (Harrow W)


Davies, Quentin (Stamford)
Hunt, Sir John (Ravensbourne)


Davis, David (Boothferry)
Hunter, Andrew


Day, Stephen
Jack, Michael


Deva, Nirj Joseph
Jenkin, Bernard


Devlin, Tim
Jessel, Toby


Dicks, Terry
Johnson Smith, Sir Geoffrey


Dorrell, Rt Hon Stephen
Jones, Gwilym (Cardiff N)


Douglas-Hamilton, Lord James
Jones, Robert B (W Hertfdshr)


Dover, Den
Jopling, Rt Hon Michael


Duncan, Alan
Kellett-Bowman, Dame Elaine


Duncan-Smith, Iain
Key, Robert


Dunn, Bob
King, Rt Hon Tom


Durant, Sir Anthony
Kirkhope, Timothy





Knapman, Roger
Rumbold, Rt Hon Dame Angela


Knight, Mrs Angela (Erewash)
Ryder, Rt Hon Richard


Knight, Greg (Derby N)
Sackville, Tom


Knox, Sir David
Sainsbury, Rt Hon Sir Timothy


Kynoch, George (Kincardine)
Scott, Rt Hon Sir Nicholas


Lait, Mrs Jacqui
Shaw, David (Dover)


Lamont, Rt Hon Norman
Shaw, Sir Giles (Pudsey)


Lang, Rt Hon Ian
Shephard, Rt Hon Gillian


Lawrence, Sir Ivan
Shepherd, Colin (Hereford)


Legg, Barry
Shepherd, Richard (Aldridge)


Leigh, Edward
Sims, Roger


Lennox-Boyd, Sir Mark
Smith, Sir Dudley (Warwick)


Lester, Jim (Broxtowe)
Smith, Tim (Beaconsfield)


Lidington, David
Soames, Nicholas


Lightbown, David
Speed, Sir Keith


Lilley, Rt Hon Peter
Spencer, Sir Derek


Lloyd, Rt Hon Sir Peter (Fareham)
Spicer, Sir James (W Dorset)


Lord, Michael
Spicer, Michael (S Worcs)


Lyell, Rt Hon Sir Nicholas
Spink, Dr Robert


MacGregor, Rt Hon John
Spring, Richard


MacKay, Andrew
Sproat, Iain


Maclean, David
Squire, Robin (Hornchurch)


McLoughlin, Patrick
Stanley, Rt Hon Sir John


McNair-Wilson, Sir Patrick
Steen, Anthony


Madel, Sir David
Stephen, Michael


Maitland, Lady Olga
Stern, Michael


Major, Rt Hon John
Stewart, Allan


Malone, Gerald
Streeter, Gary


Mans, Keith
Sumberg, David


Marlow, Tony
Sykes, John


Marshall, John (Hendon S)
Tapsell, Sir Peter


Marshall, Sir Michael (Arundel)
Taylor, Ian (Esher)


Martin, David (Portsmouth S)
Taylor, John M (Solihull)


Mates, Michael
Taylor, Sir Teddy (Southend, E)


Mawhinney, Rt Hon Dr Brian
Temple-Morris, Peter


Mayhew, Rt Hon Sir Patrick
Thomason, Roy


Mellor, Rt Hon David
Thompson, Sir Donald (C'er V)


Merchant, Piers
Thompson, Patrick (Norwich N)


Mills, Iain
Thornton, Sir Malcolm


Mitchell, Andrew (Gedling)
Thurnham, Peter


Mitchell, Sir David (NW Hants)
Townend, John (Bridlington)


Moate, Sir Roger
Townsend, Cyril D (Bexl'yh'th)


Monro, Sir Hector
Tracey, Richard


Montgomery, Sir Fergus
Trend, Michael


Needham, Rt Hon Richard
Trotter, Neville


Nelson, Anthony
Twinn, Dr Ian


Neubert, Sir Michael
Vaughan, Sir Gerard


Newton, Rt Hon Tony
Viggers, Peter


Nicholls, Patrick
Waldegrave, Rt Hon William


Nicholson, David (Taunton)
Walden, George


Norris, Steve
Walker, Bill (N Tayside)


Onslow, Rt Hon Sir Cranley
Waller, Gary


Oppenheim, Phillip
Ward, John


Ottaway, Richard
Wardle, Charles (Bexhill)


Page, Richard
Waterson, Nigel


Pattie, Rt Hon Sir Geoffrey
Watts, John


Pawsey, James
Whitney, Ray


Peacock, Mrs Elizabeth
Whittingdale, John


Pickles, Eric
Widdecombe, Ann


Porter, Barry (Wirral S)
Wilkinson, John


Porter, David (Waveney)
Willetts, David


Portillo, Rt Hon Michael
Wilshire, David


Powell, William (Corby)
Wolfson, Mark


Rathbone, Tim
Wood, Timothy


Redwood, Rt Hon John
Yeo, Tim


Renton, Rt Hon Tim
Young, Rt Hon Sir George


Rifkind, Rt Hon Malcolm



Robathan, Andrew
Tellers for the Noes:


Robinson, Mark (Somerton)
Mr. Sydney Chapman and


Roe, Mrs Marion (Broxbourne)
Mr. Bowen Wells.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments):—

The House divided: Ayes 272, Noes 251.

Division No. 152]
[10.15 pm


AYES


Ainsworth, Peter (East Surrey)
Duncan-Smith, Iain


Aitken, Rt Hon Jonathan
Dunn, Bob


Alison, Rt Hon Michael (Selby)
Durant Sir Anthony


Amess, David
Eggar, Rt Hon Tim


Arbuthnot, James
Elletson, Harold


Arnold, Jacques (Gravesham)
Emery, Rt Hon Sir Peter


Arnold, Sir Thomas (Hazel Grv)
Evans, David (Welwyn Hatfield)


Ashby, David
Evans, Jonathan (Brecon)


Atkins, Robert
Evans, Nigel (Ribble Valley)


Atkinson, David (Bour'mouth E)
Evans, Roger (Monmouth)


Baker, Rt Hon Kenneth (Mole V)
Evennett, David


Baker, Nicholas (North Dorset)
Faber, David


Baldry, Tony
Fabricant, Michael


Banks, Matthew (Southport)
Fenner, Dame Peggy


Bates, Michael
Field, Barry (Isle of Wight)


Batiste, Spencer
Forman, Nigel


Bellingham, Henry
Forth, Eric


Beresford, Sir Paul
Fox, Dr Liam (Woodspring)


Biffen, Rt Hon John
Fox, Sir Marcus (Shipley)


Booth, Hartley
Freeman, Rt Hon Roger


Boswell, Tim
Gale, Roger


Bottomley, Peter (Eltham)
Gallie, Phil


Bottomley, Rt Hon Virginia
Gardiner, Sir George


Bowden, Sir Andrew
Gare-Jones, Rt Hon Tristan


Bowis, John
Garnier, Edward


Boyson, Rt Hon Sir Rhodes
Gill, Christopher


Brandreth, Gyles
Gillan, Cheryl


Brazier, Julian
Goodlad, Rt Hon Alastair


Bright, Sir Graham
Goodson-Wickes, Dr Charles


Brooke, Rt Hon Peter
Gorman, Mrs Teresa


Brown, M (Brigg & Cl'thorpes)
Gorst, Sir John


Browning, Mrs Angela
Grant, Sir A (SW Cambs)


Bruce, Ian (Dorset)
Greenway, Harry (Ealing N)


Budgen, Nicholas
Griffiths, Peter (Portsmouth, N)


Burns, Simon
Grylls, Sir Michael


Burt, Alistair
Gummer, Rt Hon John Selwyn


Butcher, John
Hague, William


Butler, Peter
Hamilton, Rt Hon Sir Archibald


Butterfill, John
Hamilton, Neil (Tatton)


Carlisle, John (Luton North)
Hampson, Dr Keith


Carlisle, Sir Kenneth (Lincoln)
Hanley, Rt Hon Jeremy


Carrington, Matthew
Hannam, Sir John


Carttiss, Michael
Hargreaves, Andrew


Cash, William
Harris, David


Channon, Rt Hon Paul
Haselhurst, Alan


Clappison, James
Hawkins, Nick


Clark, Dr Michael (Rochford)
Hayes, Jerry


Clifton-Brown, Geoffrey
Heald, Oliver


Coe, Sebastian
Heath, Rt Hon Sir Edward


Colvin, Michael
Heathcoat-Amory, David


Congdon, David
Hendry, Charles


Conway, Derek
Hicks, Robert


Cope, Rt Hon Sir John
Higgins, Rt Hon Sir Terence


Cormack, Sir Patrick
Hill, James (Southampton Test)


Couchman, James
Hogg, Rt Hon Douglas (G'tham)


Cran, James
Horam, John


Curry, David (Skipton & Ripon)
Hordem, Rt Hon Sir Peter


Davies, Quentin (Stamford)
Howard, Rt Hon Michael


Davis, David (Boothferry)
Howarth, Alan (Strar'rd-on-A)


Day, Stephen
Howell, Rt Hon David (G'dford)


Deva, Nirj Joseph
Howell, Sir Ralph (N Norfolk)


Devlin, Tim
Hughes, Robert G (Harrow W)


Dicks, Terry
Hunter, Andrew


Dorrell, Rt Hon Stephen
Jack, Michael


Douglas-Hamilton, Lord James
Jenkin, Bernard


Dover, Den
Jessel, Toby


Duncan, Alan
Johnson Smith, Sir Geoffrey





Jones, Gwilym (Cardiff N)
Rifkind, Rt Hon Malcolm


Jones, Robert B (W Hertfdshr)
Robathan, Andrew


Jopling, Rt Hon Michael
Robinson, Mark (Somerton)


Kellett-Bowman, Dame Elaine
Roe, Mrs Marion (Broxbourne)


Key, Robert
Rumbold, Rt Hon Dame Angela


Wrkhope, Timothy
Ryder, Rt Hon Richard


Knapman, Roger
Sackville, Tom


Knight, Mrs Angela (Erewash)
Scott, Rt Hon Sir Nicholas


Knight, Greg (Derby N)
Shaw, David (Dover)


Knox, Sir David
Shaw, Sir Giles (Pudsey)


Kynoch, George (Kincardine)
Shephard, Rt Hon Gillian


Lait, Mrs Jacqui
Shepherd, Colin (Hereford)


Lang, Rt Hon Ian
Shepherd, Richard (Aldridge)


Lawrence, Sir Ivan
Sims, Roger


Legg, Barry
Smith, Sir Dudley (Warwick)


Leigh, Edward
Smith, Tim (Beaconsfield)


Lennox-Boyd, Sir Mark
Soames, Nicholas


Lester, Jim (Broxtowe)
Speed, Sir Keith


Lidington, David
Spencer, Sir Derek


Lightbown, David
Spicer, Sir James (W Dorset)


Lilley, Rt Hon Peter
Spicer, Michael (S Worcs)


Lloyd, Rt Hon Sir Peter (Fareham)
Spink, Dr Robert


Lord, Michael
Spring, Richard


Lyell, Rt Hon Sir Nicholas
Sproat, Iain


MacGregor, Rt Hon John
Squire, Robin (Hornchurch)


MacKay, Andrew
Stanley, Rt Hon Sir John


Maclean, David
Steen, Anthony


McLoughlin, Patrick
Stephen, Michael


McNair-Wilson, Sir Patrick
Stern, Michael


Madel, Sir David
Stewart, Allan


Maritland, Lady Olga
Streeter, Gary


Major, Rt Hon John
Sumberg, David


Malone, Gerald
Sykes, John


Mans, Keith
Tapsell, Sir Peter


Marlow, Tony
Taylor, Ian (Esher)


Marshall, John (Hendon S)
Taylor, John M (Solihull)


Marshall, Sir Michael (Arundel)
Taylor, Sir Teddy (Southend, E)


Martin, David (Portsmouth S)
Temple-Morris, Peter


Mates, Michael
Thomason, Roy


Mawhinney, Rt Hon Dr Brian
Thompson, Sir Donald (C'er V)


Mayhew, Rt Hon Sir Patrick
Thompson, Patrick (Norwich N)


Mellor, Rt Hon David
Thomton, Sir Malcolm


Merchant, Piers
Thumham, Peter


Mills, Iain
Townsend, Cyril D (Bexl'yh'th)


Mitchell, Andrew (Gedling)
Tracey, Richard


Mitchell, Sir David (NW Hants)
Trend, Michael


Moate, Sir Roger
Trotter, Neville


Monro, Sir Hector
Twinn, Dr Ian


Montgomery, Sir Fergus
Vaughan, Sir Gerard


Needham, Rt Hon Richard
Viggers, Peter


Nelson, Anthony
Waldegrave, Rt Hon William


Neubert, Sir Michael
Walker, Bill (N Tayside)


Newton, Rt Hon Tony
Waller, Gary


Nichdls, Patrick
Ward, John


Nicholson, David (Taunton)
Wardle, Charles (Bexhill)


Norris, Steve
Waterson, Nigel


Onslow, Rt Hon Sir Cranley
Watts, John


Oppenheim, Phillip
Whitney, Ray


Ottaway, Richard
Whittingdale, John


Page, Richard
Widdecombe, Ann


Pattie, Rt Hon Sir Geoffrey
Wilkinson, John


Pawsey, James
Willetts, David


Peacock, Mrs Elizabeth
Wilshire, David


Pickles, Eric
Wolfson, Mark


Porter, Barry (Wirral S)
Wood, Timothy


Porter, David (Waveney)
Yeo, Tim


Portillo, Rt Hon Michael
Young, Rt Hon Sir George


Powell, William (Corby)



Rathbone, Tim
Tellers for the Ayes:


Redwood, Rt Hon John
Mr. Sydney Chapman and


Renton, Rt Hon Tim
Mr. Bowen Wells.


NOES






Abbott, Ms Diane
Field, Frank (Birkenhead)


Allen, Graham
Flynn, Paul


Anderson, Donald (Swansea E)
Foster, Rt Hon Derek


Anderson, Ms Janet (Ros'dale)
Foster, Don (Bath)


Armstrong, Hilary
Foulkes, George


Ashdown, Rt Hon Paddy
Fraser, John


Ashton, Joe
Fyfe, Maria


Austin-Walker, John
Galbraith, Sam


Banks, Tony (Newham NW)
Galloway, George


Barnes, Harry
Gapes, Mike


Barron, Kevin
Garrett, John


Battle, John
Gerrard, Neil


Bayley, Hugh
Gilbert, Rt Hon Dr John


Beckett, Rt Hon Margaret
Godman, Dr Norman A


Beggs, Roy
Godsiff, Roger


Beith, Rt Hon A J
Golding, Mrs Llin


Bell, Stuart
Gordon, Mildred


Benn, Rt Hon Tony
Graham, Thomas


Bennett, Andrew F
Grant, Bernie (Tottenham)


Bermingham, Gerald
Griffiths, Nigel (Edinburgh S)


Berry, Roger
Griffiths, Win (Bridgend)


Betts, Clive
Grocott, Bruce


Boateng, Paul
Hain, Peter


Bradley, Keith
Hall, Mike


Bray, Dr Jeremy
Hardy, Peter


Brown, Gordon (Dunfermline E)
Harvey, Nick


Brown, N (N'c'tle upon Tyne E)
Hattersley, Rt Hon Roy


Bruce, Malcolm (Gordon)
Henderson, Doug


Burden, Richard
Heppell, John


Byers, Stephen
Hill, Keith (Streatham)


Caborn, Richard
Hinchliffe, David


Callaghan, Jim
Hodge, Margaret


Campbell, Mrs Anne (C'bridge)
Hoey, Kate


Campbell, Menzies (Fife NE)
Hogg, Norman (Cumbernauld)


Canavan, Dennis
Home Robertson, John


Chidgey, David
Hood, Jimmy


Chisholm, Malcolm
Hoon, Geoffrey


Church, Judith
Howarth, George (Knowsley North)


Clapham, Michael
Howells, Dr. Kim (Pontypridd)


Clark, Dr David (South Shields)
Hoyle, Doug


Clarke, Eric (Midlothian)
Hughes, Kevin (Doncaster N)


Clarke, Tom (Monklands W)
Hughes, Robert (Aberdeen N)


Clelland, David
Hughes, Roy (Newport E)


Clwyd, Mrs Ann
Hughes, Simon (Southwark)


Coffey, Ann
Hutton, John


Cohen, Harry
Illsley, Eric


Connarty, Michael
Ingram, Adam


Cook, Frank (Stockton N)
Jackson, Glenda (H'stead)


Cook, Robin (Livingston)
Jackson, Helen (Shef'ld, H)


Corbett, Robin
Jamieson, David


Corbyn, Jeremy
Janner, Greville


Cousins, Jim
Jones, Barry (Alyn and D'side)


Cox, Tom
Jones, Jon Owen (Cardiff C)


Cummings, John
Jones, Lynne (B'ham S O)


Cunliffe, Lawrence
Jones, Martyn (Clwyd, SW)


Cunningham, Jim (Covy SE)
Jowell, Tessa


Cunningham, Rt Hon Dr John
Kaufman, Rt Hon Gerald


Dalyell, Tarn
Keen, Alan


Davidson, Ian
Kennedy, Charles (Ross,C&S)


Davies, Bryan (Oldham C'tral)
Kennedy, Jane (Lpool Brdgn)


Davies, Rt Hon Denzil (Llanelli)
Khabra, Piara S


Davies, Ron (Caerphilly)
Kilfoyle, Peter


Denham, John
Kirkwood, Archy


Dewar, Donald
Lestor, Joan (Eccles)


Dixon, Don
Lewis, Terry


Donohoe, Brian H
Litherland, Robert


Dowd, Jim
Livingstone, Ken


Dunnachie, Jimmy
Lloyd, Tony (Stretford)


Dunwoody, Mrs Gwyneth
Loyden, Eddie


Eastham, Ken
McAllion, John


Enright, Derek
McAvoy, Thomas


Etherington, Bill
McCartney, Ian


Evans, John (St Helens N)
McCrea, The Reverend William


Ewing, Mrs Margaret
Macdonald, Calum


Fatchett, Derek
McFall, John


Faulds, Andrew
McKelvey, William





Mackinlay, Andrew
Rogers, Allan


McLeish, Henry
Rooker, Jeff


Maclennan, Robert
Rooney, Terry


McMaster, Gordon
Ross, Ernie (Dundee W)


McNamara, Kevin
Rowlands, Ted


MacShane, Denis
Salmond, Alex


McWilliam, John
Sedgemore, Brian


Madden, Max
Sheerman, Barry


Mahon, Alice
Sheldon, Rt Hon Robert


Mandelson, Peter
Short, Clare


Marek, Dr John
Simpson, Alan


Martin, Michael J (Springburn)
Skinner, Dennis


Martlew, Eric
Smith, Andrew (Oxford E)


Meacher, Michael
Smith, Chris (Isl'ton S & F'sbury)


Michael, Alun
Smith, Llew (Blaenau Gwent)


Michie, Bill (Sheffield Heeley)
Smyth, The Reverend Martin


Michie, Mrs Ray (Argyll & Bute)
Soley, Clive


Milburn, Alan
Spearing, Nigel


Miller, Andrew
Spellar, John


Morgan, Rhodri
Squire, Rachel (Dunfermline W)


Morley, Elliot
Steinberg, Gerry


Morris, Rt Hon Alfred (Wy'nshawe)
Stevenson, George


Morris, Estelle (B'ham Yardley)
Stott, Roger


Morris, Rt Hon John (Aberavon)
Strang, Dr. Gavin


Mowlam, Marjorie
Sutcliffe, Gerry


Mudie, George
Taylor, Mrs Ann (Dewsbury)


Mullin, Chris
Taylor, Matthew (Truro)


Murphy, Paul
Thompson, Jack (Wansbeck)


Oakes, Rt Hon Gordon
Timms, Stephen


O'Brien, William (Normanton)
Touhig, Don


O'Hara, Edward
Tyler, Paul


Olner, Bill
Vaz, Keith


O'Neill, Martin
Walker, Rt Hon Sir Harold


Orme, Rt Hon Stanley
Wallace, James


Parry, Robert
Walley, Joan


Pearson, Ian
Wareing, Robert N


Pike, Peter L
Watson, Mike


Pope, Greg
Wicks, Malcolm


Powell, Ray (Ogmore)
Wigley, Dafydd


Prentice, Bridget (Lew'm E)
Williams, Rt Hon Alan (SW'n W)


Prentice, Gordon (Pendle)
Williams, Alan W (Carmarthen)


Primarolo, Dawn
Wilson, Brian


Prescott, Rt Hon John
Winnick, David


Quin, Ms Joyce
Wise, Audrey


Randall, Stuart
Worthington, Tony


Raynsford, Nick
Wray, Jimmy


Reid, Dr John
Wright, Dr Tony


Rendel, David
Young, David (Bolton SE)


Robertson, George (Hamilton)
Tellers for the Noes:


Robinson, Geoffrey (Co'try NW)
Mr. Joe Benton and


Roche, Mrs Barbara
Mr. Robert Ainsworth

Question accordingly agreed to.

MR. DEPUTY SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved
That this House welcomes the outcome of the Government's Nuclear Review; applauds the improvements in performance by the nuclear generators since the privatisation of the rest of the electricity supply industry, including the reduction of decommissioning costs achieved so far; welcomes the proposals for more cost-effective management of Magnox liabilities; welcomes the Government's decision to privatise the industry's seven AGR stations and one PWR station during the course of 1996; endorses the decision to create a holding company, with its headquarters located in Scotland, with the parts of Nuclear Electric and Scottish Nuclear that are to be privatised as its wholly owned subsidiaries; notes that safety will continue to be of paramount importance when the industry is in the private sector; and applauds the benefits to consumers in terms of lower electricity prices which the early end to the nuclear element of the fossil fuel levy in England and Wales and to the premium price in the Nuclear Energy Agreement in Scotland will bring.

Flight PK 268

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Willetts.]

Mr. Nigel Waterson: Sadly, about a thousand people a year are killed in aeroplane crashes. Each of those deaths involves a deep personal tragedy for the loved ones left behind. This is the story of one of them.
I was approached by my constituents, Michael and Nesta Peate. They are typical decent, law-abiding citizens: Mr. Peate is a respected local optician. They had a daughter, Louise. Aged 31, she had just completed six years' training and had qualified as a clinical psychologist. She went trekking in the Himalayas to celebrate her success, and also to have a break before starting a new job. She was one of the passengers on Pakistan International Airlines flight PK 268 from Karachi to Kathmandu in Nepal on 28 September 1992. The A300 Airbus carried 167 passengers and crew, including 34 Britons such as Louise. Many were also young and talented, with everything in life to look forward to.
At 14:30 hours local time, the aircraft struck a mountain during its approach to Kathmandu airport. It was flying some 1,500 ft too low when it crashed. Everyone on board was killed. As is normal in such cases, a commission was appointed by the Government of Nepal to investigate the accident. It is somewhat ironic, in view of later developments, that it was stated to be
for the purpose of advancing aviation safety.
The United Kingdom volunteered Mr. Gordon Matthews and Mr. Jeremy Barnett of the air accident investigation branch at Farnborough to lead the investigation. In due course, they produced a thorough and detailed report. I shall return to its main findings in a moment. It is a staggering fact, however, that the report has never been officially published—and, indeed, has been suppressed by both the Nepalese Government and the airline.
Far from being available to advance aviation safety throughout other airlines and airports, the report has officially never seen the light of day. It is not available for use by the families in any litigation. Moreover, the inquest held in London was somewhat farcical, because the report could not be officially admitted in evidence—although most people in the court had access to unofficial copies.
As my hon. Friend the Minister will know, I have pursued this aspect of the case through the Foreign and Commonwealth Office. On 24 January last year, I asked what representations had been made to the Government of Nepal concerning publication of the report. I was told in a reply that no representations had been made, but that copies of the report had been distributed to relatives of the British victims and "interested parties". That is all very well, but I have already explained why the copies of the report now circulating have no official status.
I hope that the Minister will renew pressure on the FCO to press the Nepalese for formal publication. Surely, it must be right that such a report should be published as a matter of course when there is such a tragedy. I have seen

a copy of the report on the crash of flight PK 268. Essentially, it blames the pilots of the Pakistan International Airlines flight for
consistently failing to follow the approach procedure".
There is also criticism of air traffic control at Kathmandu
because of
a missed opportunity to prevent the accident
when it failed to challenge the low altitude report by the pilots.
The report concluded that some of the air traffic controllers
had a low self esteem and were reluctant to intervene in piloting matters.
There were also criticisms of PIA's training of its crews for the difficult approach to Kathmandu, as well as the route checking and flight operations inspections procedures. There was also criticism of the ground proximity warning system that
failed to warn the crew of impending flight towards high ground because of the combination of elderly equipment and rugged terrain".
In all, the report makes 21 recommendations, mostly involving the airline and the Nepalese authorities.
I shall later discuss compensation, but before doing so, I should make it clear that people such as my constituents, the Peates, are not particularly concerned about monetary compensation. They simply do not wish the parents of other young people to have to go through this personal hell. I can do no better than to quote from one of their early letters to me. It stated:
As deeply grieving parents of a very special talented daughter all we can hope is by our actions to prevent other families enduring similar needless destruction. We were dismayed at the Inquest when PIA were asked by a relative if they intended to implement the safety recommendations that there was no reply.
The system for compensation for air crashes is based on the Warsaw convention, which was formulated as long ago as 1929. At that time, flying was rightly regarded as extremely hazardous, hence the argument for introducing a cap on the amount of liability for death or injury.
I am indebted to Mr. Nigel Taylor, a solicitor who represents the Peates, among others, and who specialises in representing air crash victims. I shall quote more than once from his excellent article in the "Journal of Personal Injury Litigation", entitled "Limitation of Liability of Air Carriers to Air Crash Victims—Has the Warsaw Convention Reached its Retirement Age?"
The limit for carriers registered in countries that have signed only the Warsaw convention would be about £7,000 at current exchange rates. Many countries have signed The Hague protocol that amends the original Warsaw convention. It came into force in 1963 and the maximum compensation can be as little as £13,633.40—and that for the loss of a human life. To its credit, the United Kingdom has signed up to the Montreal protocol, which raised the limit to about £95,000. Pakistan has not signed up to that more recent protocol. All air carriers flying into the United States of America, as well as US-registered carriers, subscribe voluntarily to a maximum limit of $75,000, including legal costs, in the event of loss of life. I understand that that limit is often waived when planes crash in the United States.
Mr. Taylor states in his excellent article:
A 40 year old executive earning £75,000 a year survived by a wife and two young children, could anticipate compensation of £500,000. If killed in a road traffic accident, this would be fully


recoverable. If killed on board an aircraft operated by a carrier which was not contracted for limits in excess of the Warsaw-Hague minimum, the recovery could be as little as £13,633.40, i.e. less than 3 per cent. of the full value of the claim.
It has been argued that the cap on damages Is a quid pro quo for what is said to be the strict liability upon a carrier under the Warsaw system. Mr. Taylor describes that as "a common misconception" and he points out various technical defences that are available to lawyers acting for an airline. Article 25 of the convention in principle imposes unlimited liability on a carrier
if it is proved that the damage resulted from an act or omission of the carrier, his servants or agents, done with intent to cause damage or recklessly and with knowledge that damage would probably result; provided that, in the case of such act or omission of a servant or agent, it is also proved that he was acting within the scope of his employment".
As a lawyer, I can see at a glance that that imposes a pretty heavy burden of proof upon a claimant. As Mr. Taylor says,
in this country there are no reported cases where an injury or death claimant has successfully discharged the burden that arises".
Indeed, the subjectivity of the test is such that it has been said that the pilot would almost have to leave a suicide note before unlimited liability could be sustained.
What can be done to improve that patchwork of outdated and inadequate compensation? In my correspondence with him, the former Under-Secretary of State for Transport, the noble Lord Mackay, conceded that the current limits
are now very out of date".
He also pointed out that unilateral action by the United Kingdom would
not help families like the Peates whose daughter was lost on a flight by a non-UK registered aircraft".
One solution is to obtain international agreement to increase very substantially the liability limit, certainly to its 1975 value of about 250,000 special drawing rights. In October 1992, the European Union issued a consultation paper, but progress through the European Civil Aviation Conference has been slow. The International Air Transport Association has now had approved an application for anti-trust immunity so as to permit inter-carrier discussions. It is also arguing for higher levels of compensation within the same basic framework.
I believe that something more dramatic is required—possibly scrapping the Warsaw system altogether. After all, the last time that a Government—in that case, the United States of America—threatened to denounce the convention, the airlines were put under so much pressure that they agreed a much improved regime in the shape of the 1966 Montreal inter-carrier agreement. Another brave step forward was that taken by the Japanese airlines which in 1992 abolished the artificial limits in most circumstances. It is now about time that some western airlines followed their example.
I have already made the point that this rather creaking system came in at a time when air travel was pretty dangerous. Now it is infinitely more dangerous to drive to the airport than it is to fly to most parts of the world. In Mr. Taylor's words,
If it was suggested that a bus or coach company should be permitted to limit their financial liability to £13,000 when they kill people, there would be a public outcry".

That is particularly true when one considers that about 1,000 fatalities a year are involved. Admittedly, some of those killed—but by no means all—would be able to claim very large damages in jurisdictions such as the USA. Even so, the amounts involved ought to be insurable in the ordinary way and must be insignificant when compared to the turnover of airlines worldwide.
Finally, there are two other issues relating to compensation. Under English law, it is still the position that if someone over 18 is killed without any dependants—as was true of many of the passengers, including Louise Peate—no substantial damages will be payable on death. Bereavement damages are allowed under English law only in respect of a spouse or a child under 18 years of age. I am aware that that is not part of my hon. Friend's responsibility. I understand that the Law Commission has been looking at this issue and I hope that we shall see some change in the future.
There is no provision to compensate families for the cost of annual trips to a distant crash site to visit the graves of their loved ones. In the case of the Peates, their daughter's body was flown back to this country. The many unidentified victims were buried in a mass grave in Kathmandu. Some of the families make regular visits to the memorial garden there and they have to pay for those visits out of their own pockets. I understand that PIA has been unprepared to commit itself to the long-term upkeep of the memorial garden. In all conscience, that is unacceptable from an airline which has regular flights out of London and Manchester and carries 50,000 or 60,000 passengers a year from the United Kingdom.
Finally, air travel has been one of the great success stories of this century. It enables millions of people to traverse the globe, either on business or for pleasure, often at modest cost and in relative safety and comfort. On the few occasions when pilot error or other circumstances cause a tragic loss of life, it is surely wrong to continue to deny proper investigation and compensation to the families of the victims, for whom it is part of the natural grieving process.

The Parliamentary Under-Secretary of State for Transport (Mr. Steve Norris): I congratulate my hon. Friend the Member for Eastbourne (Mr. Waterson) on his assiduity in pursuing the matter that he has brought to the attention of the House tonight—the tragedy of the loss of Pakistan International Airlines flight 268, which crashed in Nepal en route from Karachi to Kathmandu on 28 September 1992. It was a tragic accident, and it is quite right that my hon. Friend has once again taken the opportunity to draw attention to the decision of the Nepalese authorities not to publish the report of the investigation into the accident.
As I shall explain, the unpublished version of the report has been circulated widely, but—I agree with my hon. Friend—not in a manner that will fully satisfy the relatives of victims of the crash. That is why we are still pressing for full publication of the report.
My hon. Friend also raises the issue of compensation and the Warsaw convention. Obviously, relatives of victims of such disasters, such as Mr. and Mrs. Peate, are not primarily concerned with monetary compensation, but the issue will inevitably arise in the aftermath of such tragedies. As my hon. Friend said, the subject of


compensation has added poignancy in the case of the loss of flight PK 268, as the only comfort available to many of the families is to visit the memorial garden at the site of the crash near Kathmandu.
I understand that, although Pakistan International Airlines made arrangements for many of the relatives in the United Kingdom to visit the memorial garden shortly after it was completed, the airline has not offered to fund any further visits. That obviously adds to the distress of relatives, who need the comfort and solace of visiting the graves of their loved ones. I shall go further into the issue of compensation in a moment, but first I shall deal with the investigation and the subsequent accident report.
As my hon. Friend said, the single largest group of victims in that tragic crash were British. Because of the number of British fatalities, the United Kingdom's air accident investigation branch offered assistance to the Nepalese authorities in carrying out an investigation into the causes of the crash. The Nepalese subsequently asked the International Civil Aviation Organisation for assistance, and specifically asked that the international team be led by the AAIB from Britain. The international team also included investigators from Canada and Australia.
The team was, in effect, seconded to the Nepalese Government to advise the Nepalese commission of inquiry that was convened to examine the circumstances of the accident. The findings of the investigation team formed the basis of the Nepalese commission's final report.
During that investigation, the Nepalese commission indicated that it would publish the report at the conclusion of the investigation. In accordance with its normal practice, the AAIB sought permission to publish the Nepalese report in the United Kingdom. That permission was not forthcoming.
As my hon. Friend quite correctly said, the report has not yet been formally published. We pressed the Nepalese to publish the report, and the Nepalese commission of inquiry eventually agreed to release the final report to interested parties in August 1993. The AAIB received its copy on 8 September that year.
Recognising their concern and their need for full details, the AAIB provided copies of the report to the families of those who died in the accident as soon as they had received it from the Nepalese. In addition, it arranged for the families to visit the AAIB at Farnborough to receive a briefing on the technical content of the report, and to have the opportunity to ask questions of the inspectors who participated in the investigation.
Under the provisions of annexe 13 to the Chicago convention, which lays down the safety standards for international aviation, circulation of an accident report cannot take place until the state conducting the investigation has released the final report. Although ICAO has recommended that reports should be published, there is no legal requirement on a member state to do so. Since the crash, the United Kingdom has pressed ICAO to upgrade the provision on publication, and ICAO has now agreed that publication of accident reports should be a standard practice implemented by all member states.
Despite extensive efforts, the Government have been unable to persuade the Nepalese authorities to publish the accident report more widely. However, a copy has been submitted, as required, to ICAO, which publishes quarterly summaries of all the air accident reports received from member states. Those summaries are sent to all member states—183 in total—and include details of the circumstances of the accident with causal factors and recommended action.
Although that falls short of full publication, it brings the findings of the Nepalese report to the attention of those who are best placed to help prevent similar tragedies in the future. However, I assure my hon. Friend that we are continuing to press the Nepalese authorities through diplomatic channels for full publication of the report.
A variety of recommendations were directed at Pakistan. Some pertain directly to the complex nature of the Kathmandu approach, with which I know my hon. Friend is familiar. But other recommendations showed some areas of more general airline practice where improvements were necessary—for example, improved route checking and expanded training of flight crew. The implementation of those recommendations will lead to improvements in PIA's operational practice, but it should be noted that there is nothing in the accident report which has given the Department any cause to question the airline's competence to continue to operate to airports in this country. I make that clear and put it on the record. The Civil Aviation Authority of Pakistan has confirmed that it is regulating its airline to ensure its adherence to ICAO safety standards.
Under the Chicago convention, we are expected to accept the assurances already given both to us and to ICAO, since the convention—I know that my hon. Friend is expert in these matters and he will forgive me if I narrate this for the important sake of the record—is clear that it is for each contracting state to regulate its own airlines, and that other states must accept the certificates of competence issued by contracting states.
It is true that it took a long time to obtain details from Pakistan, but it should be remembered that the United Kingdom has no locus to insist. ICAO, too, had seen the report and could have acted if it had identified serious failings. Nor have we had any indications of problems with flights to the United Kingdom. No complaints about safety or procedures have been passed to us by the Civil Aviation Authority, airport authorities or passengers.
As to the provisions of the Warsaw convention, I agree with my hon. Friend that the limits set on carriers' liability by the original convention, and the amending Hague protocol, are now obviously out of date. The United Kingdom Government thought so in 1975—my hon. Friend was kind enough to give credit to our predecessors at that time—and that is why they signed the 1975 Montreal protocols, increasing the limit, as he said, to about £93,000, or 100,000 SDRs, and have constantly urged other states to do likewise. However, the new limit and the other changes made by the protocols have never come into force because insufficient states have ratified them. My hon. Friend knows well the situation with which that presents us.
The United Kingdom adopted the higher limit for its carriers in 1979, but unfortunately only about 20 other states have followed our example and neither Pakistan nor Nepal is among that number.
By late 1992, we and other member states of the European Civil Aviation Conference concluded that, although we would continue to want the Montreal protocols to come into force, some other action would have to be taken if we wanted an improvement in the immediate future. ECAC therefore began discussions, in which the UK has been actively involved, on possible alternative ways of increasing the Warsaw convention limits.
The outcome of those discussions was a recommendation by ECAC that airlines registered in ECAC member states should be encouraged to enter into a voluntary inter-carrier arrangement similar to that which already applies to carriers flying in the United States. That agreement should, inter alia, increase those limits to at least the current equivalent value of the Montreal protocol limits. The agreement could at this stage apply only in Europe—I have to add that qualification—although the aim would be to extend it eventually throughout the international aviation community.
That is the agreement currently being considered by IATA, following the granting by the United States of an exemption from the US anti-trust laws. It is a large task for any organisation to undertake, but I am confident that IATA will be able to accomplish it.
The United Kingdom Government's opinion is that such a voluntary arrangement offers the best and most readily available means to update the Warsaw convention effectively. We believe that the convention should be retained, because it provides the essential basis for a global system for the compensation of passengers or their families when killed or injured on an international flight. Without it, carriers would not be bound to make even the present "no fault" payments.
The Warsaw convention does not and cannot absolve airlines from their liability to compensate people bereaved or injured as a result of an air crash. The limits that it sets

are only on the amounts that an airline must pay regardless of the cause of the crash, and without the bereaved or injured people having to take legal action. Under the convention as at present in force, there is no limit on the amounts that a court may award if an airline is successfully sued. That is why, for example, relatives of American citizens who have died in air crashes have been awarded rather larger sums in compensation than the convention limits.
I do understand that that is all of small comfort to bereaved relatives who must, until the Montreal protocols come into force, take such legal action in the country either of registration of the aircraft or of the crash. In many cases, both countries are too distant for the relatives to be able to travel there often enough to visit graves, let alone visit in order to conduct legal action. The United Kingdom Government could, in such cases, make strong representations to the Government or Governments of the states involved to assist the passengers' families but, in the final analysis, it is for the airline involved to acknowledge its responsibilities to its passengers and make appropriate compensation payments to them or their families when due.
I echo my hon. Friend's sentiments about the especially tragic circumstances of the dreadful accident that befell the gifted daughter of Mr. and Mrs. Peate, lost to them in the prime of life. My sympathies also go out to the parents and relatives of all the other victims, many of whom have written to the Department. I want to assure them and my hon. Friend that the Department is doing all that it can to press for an amendment to update the international conventions governing the levels of available compensation, so that we may ensure that other families in future tragedies are spared similar distress.

Question put and agreed to.

Adjourned accordingly at six minutes to Eleven o'clock.